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Socia Insurance
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"' commonwealth b^eaii of ceksus and statistics,
melbouKnet^ ""■-'"■:^~'~~-^™~^
SOCIAL INSURANCE.
REPORT
BY THE
COMMONWEALTH STATISTICIAN,
G. H. MIBBS, F.S.S., ETC.,
TO
THE HONORABLE F. G. TUDOR, M.P.,
MINISTER OF STATE FOR TRADE AND CUSTOMS.
SEPTEMBEE, 1910.
J. KBHF, OOVEBNMBNT FBIHTES, UBLBOUKNE,
[O.S.. No. 98,]-0. 13281. »/.
COMMONWEALTH BUREAU OF CENSUS AND STATISTICS,
MELBOURNE.
SOCIAL INSUKANCE.
REPORT
BY THE
COMMONWEALTH STATISTICIAN,
G. H. KNIBBS, r.S.S., ETC.,
TO
THE HONORABLE F. G. TUDOR, M.P.,
MINISTER OF STATE FOK TRADE AND CUSTOMS.
SEPTEMBER, 1910.
§p^ gVittliorttg :
J. KEMP, OOVERNMEKT PEIKTER. MliMiOl.HNE.
[C.S., No. 98.]-C.l22Sl. •/•
-C-^^ — — -
K^x^<^^t:fc
To the Honorable Frank G. Tudor, M.P., Minister of State for Trade and Customs,
Commonwealth of Australia.
Sir,
During a visit to Europe, between April and December last year, the primary
object of wMcti was the study of the methods of the various Statistical and Census
Bureaux, the opportunity occurred of obtaining information on many matters of
importance to the Commonwealth, among others, on the development of what is
now known as Social Insurance.
In the following Report, which I have the honour to submit for your acceptance,
I have endeavoured to ofier some account, not merely of the existing state of Social
Insurance in the various countries of Europe, but also of their origin and
development. This has been done advisedly, since the evolution of social
insurance is a fact of far-reaching importance, and the experience which the
history of Europe offers is of value to any country contemplating legislation with
the same beneficent design.
In this connexion, I may point out that in Continental Europe legislation on
such complex and far-reaching matters as the one under consideration is pre-
ceded by a comprehensive study of all details ; the object being not only to
bring into clear relief the characters of the policy, but also to insure that the
machinery, by means of which it is intended that effect shall be given thereto,
shall attain its object.
It is quite impossible in the compass of a report of limited dimensions to fully
discuss the various aspects of the matter, or to disclose the details of the history
of this element of progress in social economics. The amount of literature to be
studied was almost overwhelming, as a reference to the bibliography hereinafter
given will disclose. It must suf&ce to say that great progress has now been
made, and it is hoped that the main features of the growth of the various systems
of Social Insurance have been outlined in such a manner as will facilitate the further
study of the subject, and will eventually lead to the formation of a basis on which
legislative effort may be founded.
I have the honour to be.
Sir,
Your Obedient Servant,
G. H. KNIBBS,
Commonwealth Statistician.
Commonwealth Bureau of Census and Statistics,
Melbourne, 9th September, 1910.
ST3,'OPSIS.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
CHAPTER I.— THE DEVELOPMENT OF SOCIAL INSURANCE IN EUROPE.
Section 1. — Modern Conceptions of Social iNStrEANCB.
Meaning of Social Insurance
Fundamental doctrine
Genesis of doctrine
Development of doctrine
Insurance against sickness
Insurance against accident
Insurance against invalidity and old age
Insurance against unemployment
Progressive legislation
Initial crudity
Social insurance and national destiny
Bibliography
Section 2. — Extent of Social Insurance.
Scope first recognised
xYcts passed in various countries
Compulsory insurance and compulsory organization
Contributory system
Premium and assessment systems
Section 3. — International Oonorbsses on Insurance.
International Congresses on Social Insurance . .
Other congresses on insurance
Results of congresses
CHAPTER II.— SOCIAL INSURANCE IN GERMANY.
Section 1. — Introduction.
General . .
Principal Acts inaugurating systems . .
Fundamental principles of Acts
Section 2.— Insurance against Sickness.
Early experiments . .
Acts now in force . .
Chief features of Acts
Organization
Benefits afforded
Numbers of organizations, members, and cases and days of sickness
Financial statement of operations
Section 3. — Insurance against Accident.
Legislation
Chief features of Acta
Benefits afforded . .
Organization
Numbers insured . .
Financial statement of operations
Section 4. — Insurance against Invalidity and ()r,D Age.
Legislation
Features of system
Benefits afforded
Organization
Contributory system
Annuities and payments granted
Total payments made since inauguration
Particulars of medical treatment
page
11
11
12
12
13
14
15
15
15
15
16
16
16
17
18
18
19
20
20
20
21
21
22
22
23
23
24
24
24
25
25
25
26
26
26
27
28
28
29
29
30
31
32
32
Section 5. — Summary.
1. Numbers of organizations
2. Numbers insured and compensation paid
3. Future developments
CHAPTER III.— SOCIAL INSURANCE IN AI^STKIA.
Section 1. — Intbodttction.
1. Early organizations
2. Acts of 1852 and 1867
3. Acts now in force . .
Section 2. — Insurance against Accidents.
1. General
2. Organization
3. Benefits afforded and particulars of operations
Section 3. — Insurance against Sickness.
1. General
2. Organization
3. Benefits afforded
4. Particulars of operations
5. Recent developments
Section 4. — Miners' Funds.
1. General
2. Chief features of system
3. Particulars of operations
Section 5. — Recent Developments and Proposed Legislation.
1. General
2. General invalidity and old-age pensions proposed
3. Bill of 1904
CHAPTER IV.— SOCIAL INSURANCE IN HUNGARY.
Section 1. — Introduction.
1. Early organizations
2. Development of miners' funds
3. Development of sickness and accident insurance
Section 2. — Insurance against Sickness.
1. General
2. Chief features of system
3. Organization
4. Supervision by the Government
Section 3.-
1. General
2. Chief features of system
3. Organization
-Insurance against Accidents.
Section 4. — Future Developments.
1. General
2. Unity of Organization
CHAPTER v.— SOCIAL INSURANCE IN ITALY.
Section 1. — Introduction.
L General
2. Failure of voluntary accident insurance scheme
3. Development of compulsory accident insurance legislation
4. Development of voluntary invalidity and old-age insurance legislation
Section 2. — Compulsory Insurance against Accidents.
\. General
2. Chief features of system
3. Benefits afforded
4. Mutual insurance syndicates . .
6. Premiums and compensation paid
33
33
34
35
35.
35
30
30
30
3T
37
37
37
3S
38.
38
3a
38
39
39'
4a-
41
41
42
42
42
43
43.
43
43.
43
44
44
44
45
46.
46
4T
47
47
4»
Section 3. — Voluntary Insurance aoainst Invalidity and Old Aoe.
1. General
2. Organization
49
49
49
50
50
50
51
R'TI
53
53
53
54
54
3. Contributions
4. Benefits afforded
5. Amending Act of 1901
6. Amending Act of 1906
7. Particulars of operations
Section 4. — Sickness Insurance and Future Developments.
1. General . . . . . . . . . . . . . . . . 51
2. Voluntary sickness funds . . . . . , , . . . . . 51
-3. Future developments . . . . . . . . . . . . . . 51
CHAPTER VI.— SOCIAL INSURANCE IN FINLAND.
Section 1. — Introduction.
1. General . . . . . . . . . . . . . . . . 52
2. Development of legislation . .
Section 2. — Compulsory' Insurance against Accidents.
1. General
2. Chief features of system
3. Benefits afforded and compensation paid
4. Scope of operations
6. Proposed modifications of system
Section 3. — Voluntary Insurance against Sickness.
1 . General . . . . . . . . . . . . . . . . 55
2. Scope of system . . . . . . . . . . . . . . . . 55
3. Particulars of financial operations . . . . . . . . . . . . 55
4. Compulsory system proposed . . . . . . . . . . . . 56
Section 4. — Voluntary Invalidity and Old-age Insurance.
1. General . . . . . . . . . . . • . . . . 56
2. Scope of voluntary system . . . . . . . . . • . . . . 57
3. Compulsory system proposed . . . . . . . . . . 57
4. Future developments . . . . . . . . . . . . . . 58
CHAPTER Vll.— SOCIAL INSURANCE IN HOLLAND.
Section 1. — Introduction.
1 . General . . . . . . • • ■ . . ■ • • • • . . 58
2. Bill for compulsory sickness insurance . . . . . . . . . . 58
Section 2.— Compulsory Insurance against Accidents.
1. General
2. Organization
3. Benefits afforded . .
4. Scope of operations and compensation granted
.5. Self-insurance and transfer of risks . .
Section 3. — Proposed Developments.
1. Insurance for seamen .. .. .■ .. •• ■■ ..01
2. Bill for invalidity and old-age insurance . . . . . . . . . . 62
CHAPTER VIII.— SOCIAL INSURANCE IN THE SCANDINAVIAN STATES.
Section 1. — Introduction.
1. General .. .. .. .■ ■• ■■ •• •• • ■ «2
2. Different systems . . . . . . ■ • . • • • • ■ . . 62
Section 2. — Compulsory Accident Insubancb in Norway.
1. Development of legislation . . . . . • . . ■ • • • . . 62
2. Chief features of system . . . . . ■ . . • • • • . . 63
3. Benefits afforded . . . . . . • • ■ • • ■ • • . . 63
4. Proposed extensions . . . . ■ • . ■ ■ • . . 63
Section 3.— Sickness, Invalidity, and Old-aoe Insurance in Norway.
1. Sickness insurance . . . . . . • ■ • . ■ ■ • ■ . . 63
2. Invalid and old-age insurance . . . . . . • • . . 64
59
59
60
60
60
CHAPTER IX.— SOCIAL INSURANCE IN FRANCE.
Section 1. — Introduction.
1 . General
2. Development of Byetems
Section 2. — Sickness Insubance.
1. Introduction
2. Voluntary insurance
3. Compulsory insurance of miners
Section 3. — Accident Insurance.
1. General
2. Voluntary insurance
3. Compulsory insurance of seamen
Section 4. — Invalidity and Old-age Insurance.
1. General
2. Voluntary insurance
3. Compulsory insurance of miners and seamen
4. Proposed general compulsory system
64
66
66
66
66
6&
66
67
67
67
67
67
CHAPTER X.— THE PROBLEM OE INSURANCE AGAINST UNEMPLOYMENT.
68
69
70
71
71
73
75
76
Section I. — Introduction.
1. General
2. Nature of insurance against unemployment
3. Causes of unemployment
4. Historical development of unemployment insurance . .
Section 2. — Experiments on Continent of Europe.
1. Switzerland
2. The Ghent system . .
3. Germany . .
4. Norway and Denmark
Section 3. — Proposed Scheme in Great Britain.
1. Introduction . . . . . . . . . . . . . . . . 76
2. TJnem'ployed Workmen's Act 1905 . . . . . . . . . . . . 77
3. Labour exchanges . . . . . . . . . . . . . . 77
4. Proposal for unemployment insurance . . . . . . . . 78
Section 4. — General Conclusions.
1. Introduction
2. Voluntary or compulsory system
3. Differentiation of risks
4. Defects in Ghent system
5. Organization
6. Summary and conclusion
CHAPTER XI.— THE POLICY OF SOCIAL INSURANCE IN AUSTRALIA.
Section 1. — Existing Institutions.
1. General
2. Friendly Societies . .
3. Accident insurance companies
4. The Commonwealth old-age pon.sion scheme
6 Life assurance companies
6. Staff and pension funds
7. Insurance against unemployment
8. Future developments
Section 2. — Benefits of Social Insurance-
1. General
2. Improved processes and appliances
3. Improved treatment and hygiene
4. Increased efSoiency of workmen
5. Beneficent moral effect
6. General prosperity
79
79
80
81
81
83
84
84
85
85
86-
86
86
86
87
87
88-
Section 3. — Subvet and Outlook.
1. General
2. The desirability of State insurance
3. Compulsory insurance
4. Incidence and coat
5. Organization
6. General policy
89
89
90
91
91
92
APPENDICES.
Appendix A. — Bibliographical References . .
Appendix B. — Tabular Statement of Extent of Sickness Insurance
Appendix C. — Tabular Statement of Extent of Accident Insurance . .
Appendix D. — Tabular Statement of Extent of Invalidity and Old-age Insurance
95
98
102
INDEX
105
SOCIAL INSUEANCE.
CHAPTER I.— THE DEVELOPMENT OF SOCIAL INSURANCE IN EUROPE.
Section 1. — Modern Conceptions of Social Insurance.
1. Meaning of Social Insurance. — In recent years there has been a remarkable
development in the application of the principles of insurance, and among the branches
which have reached a considerable scope and magnitude is that of social insurance.
In its widest sense, the latter term would, of course, cover the insurance of all
classes in the community against all risks to which the social organism is exposed.
It is ordinarily employed, however, in a much more restricted manner, viz., to denote
insurance of workmen, as a distinctive class, against sickness, accident, death, old
age, or other adversity. It is in this restricted sense that the term will be used
hereinafter. Through recent progress in economic studies and in the science of
government it has become manifest to pubhcists and economists that, in the purview
of an/ one section of insurance, it is essential to embrace others of an analogous
nature, if a proper understanding of the section in question is required. In
regard to the various branches of social insurance this remark applies with
special force.
To meet the demand for social insurance a number of systems has been devised.
Insurance or relief funds have been created, either on a compulsory or voluntary
basis, by the central government, by national or by local bodies, by groups of
working men, by industrial establishments, and by employers and employes operat-
ing conjointly ; and, furthermore, commercial insurance companies have created
industrial insurance departments, in which premiums are collected in small amounts
and at frequent intervals. These various schemes of insurance, though under different
forms and systems of organization and management, are all designed for the
benefit of wage-workers and persons earning small salaries, and their purpose
usually is (1) to compensate to some extent for the loss of wages or salary occasioned
through accident, sickness, or other disability ; (2) to obviate privation to depen-
dants through death ; and (3) to furnish a sufficient sum to pay funeral expenses, &c.
This Report does not enter the field of the industrial departments of insurance
companies, and does not deal with the insurance provisions of individual trade
unions and friendly societies ; it is limited to a study of systems of social insurance
on a national and compulsory basis, or on a voluntary basis but under the control
of the central government.
2. Fundamental Doctrine.— ■'Yh.e fundamental doctrine underlying the whole
fabric of social insurance, a doctrine which has to some extent become concrete in
the countries of Europe is, that a proper regard for the sohdarity of each com-
munity requires that all classes belonging to the community should be protected
by the strength of the community as a whole, against the incidents of misfortune
on the class or on the individual. This notion of sohdarity, viz., that the strong
must carry the weak, is regarded as essential to a favorable development of the
nation, and it is recognised that the national welfare requires sacrifices to be made
by those able to make them, for the well-being of its weaker elements. In pother
words, it is recognised^that, in order to advance the prosperity of a nation as a
whole, and to conserve its vital forces, it is better that a misfortune falling on an
ndividual should be distributed and borne lightly by the whole community, rather
han that the individual should be crushed by the weight of his own misfortune.
12
And although the results of an efficient system of social insurance must necessarily
he philanthropic in their effect in individual cases, yet the basic principles of such
a system are neither philanthropic nor individualistic in their nature, but aim at
the general betterment of the community and at the proper guidance of national
destiny.
3. Genesis of Doctrine. — In Europe the various aspects of the several forms of
social insurance have been closely studied, particularly in relation to the general
well-being of the social organism of the entire community as well as in its relation to
national destiny. And it may be added that studies in economics and statecraft have
revealed with an ever increasing clearness the fact that for many purposes every
community is to be regarded as an organism, since the reactions of individuals
or groups of individuals upon other individuals or groups, or upon the whole com-
munity, are of that intimate character which fully justifies the analogy. The true
significance of the subject in question can be adequately appreciated only from
this stand-point. The development of the fundamental doctrine of social insurance
in Europe, a direct consequence of the introduction of this conception of a com-
munity as an organism, was greatly influenced by Ferdinand Lassalle (1825-1864),
who, however, in turn recognised his indebtedness in respect of these ideas to two
of Fichte's (1762-1814) works, viz., Grundlage des Naturrechts (Basis of Natural
Law), published in 1796, and Der Gesehlossene Handelsstaat (The Isolated Com-
mercial State), pubUshed in 1800. Not long afterwards, viz., in 1819, Sismondi
(1773-1844) published his Les nouveaux principes d'economie politique ou de la richesse
dans ses rapports avec la population (The new principles of political economy or of
wealth in relation to the people), in which the idea of government was represented
as the protection of the weak against the strong. In the work of Winkelblech
(1810-1865), published under the pseudonym of Karl Mario, in 1850-1859, viz.,
Untersuchungen ilher die Organisation der Arbeit, das System der Weltokonomie (In-
vestigations concerning the Organization of Labour, or System of Universal
Economics), the uncertainty of employment, the general consequences of the
increased division of labour, and the various limitations to which the labouring
classes are subjected in the existing form of civilization were considered in their
general bearings.
Although modern social insurance originated in these conceptions, an actual
working example of a scheme of social insurance existed much earlier, viz., in the
" Knappschaften " and " Knappschaftskassen " (miners' associations and miners'
funds) of Prussia and Austria. These can be traced back to the 14th century ;
but it was not till comparatively recently, viz., 10th April, 1854, that the first law
was passed making compulsory the creation of such funds. The law required con-
tributions from the miners and their employers, and fixed by regulation the manage-
ment of the organizations. The magnitude of the institution may be gauged from
the fact that in 1852 in Prussia alone there were no less than 56,462 miners out of
a total of 68,300, or 82"67 per cent., belonging to the fund. It may be added that-
Schaeffie (1831-1903), who did much towards creating the existing forms of social
insurance, was powerfully influenced by Winkelblech's ideas, previously referred to.
4. Development of Doctrine. — The great changes in social and in industrial life
since the middle of the last century had resulted in alterations in the relations
between employers and workmen, and a new social classification of the population
had brought the wage-earners into greater prominence. Workmen had become
politically free and had acquired the same political rights as their employers.
Socially and economically, however, they were dependent. Petty industries
developed into manufactures on a large scale, and the steady growth of factories
and of large industrial enterprises greatly increased the number of workmen. The
leading inventions of last century in gas, steam, electricity, &c., increased the
13
risk of accident, while the extension of chemical manufacture, containing poisonous
substances, caused serious damage to health. Artisans were required to work
under modern conditions of manufacture in small and crowded places, often side
by side with unskilled workers.
The two factors of modern industry, employer and workmen, were developing
rapidly on difierent lines. The ancient feeling of sohdarity between the two parties
ceased, and it became more and more evident that the individual workman was no
longer able to fight for himself against the dangers which beset his occupation, and
which resulted in sickness, accident, or death.
The general progress of civiUzation has in fact involved far-reaching changes
in the constitution of the social organism, and the economic position of the worldng
classes is now far less assured than formerly. To-day, it is realized that legislation
cannot overlook such eminent changes, but must in a sense keep pace with them,
and attempts have therefore been made to secure the solidarity of the working
classes by systems of insurance against overwhelming disaster, as, for example,
might arise from sickness, accident, old age, or general incapacity to work.
5. Insurance against Sickness. — For a long time past the necessity of insuring
workmen against loss caused through sickness has been recognised as an important
question. While the danger of sickness exists everywhere and for everybody,
among the great masses of the working population the conditions of hfe, as for
example, insufficient nourishment, insanitary crowding of dwellings, distrust in
doctors and confidence in quacks, &c., all contribute to its increase. The densely
populated working districts appear to be centres of tubercular infection and other
infectious diseases, and in them the difEerent epidemics spread very readily. While
compulsory insurance against sickness cannot by itself overcome all these un-
favorable conditions, it is of the greatest value in rendering assistance to other
organizations to struggle against the various dangers which threaten the public
well-being. Sickness insurance has to provide medical help as well as financial
assistance to the insured persons in order to ward off economic difficulties, in this
way opposing one of the greater obstacles to prompt recovery. In providing
sick persons and their families with money and food, sickness insurance collaborates
with the endeavours of all other organizations seeking to raise the hygienic, economic,
and social conditions of the population to a higher level.
Legislation with regard to pubhc charity funds was in existence at a com-
paratively early date, but this proved unsuitable, since pubhc charity is an ofience
to the legitimate self-respect of the workman, and operates to deprive him in
many cases of his citizen rights. The establishing of associations and clubs for
mutual help amongst workmen also proved unsuitable, as did voluntary insurance.
These systems, as a rule, appealed only to the stronger and better situated
classes of workmen, while the economically weaker section kept aloof, partly from
inability to pay the contributions. AU these circumstances called for the institution
of something better, the transformation of the civil law into a social law, which was
based, not on the idea of pity, but on a sentiment of justice. That it is the duty
of the State to care for its needy members, not only for humanitarian reasons, but
also for reasons of State policy, is a view which has continually reinforced itself.
Among the poorer classes who constitute the majority of the population, and are
generally the least educated, it is essential that it should be realized that the State
is not merely a necessary but also a beneficent institution, and exists as much for
the interest and benefit of the poorer classes as for the richer classes of the
population. Nothing will inculcate these ideas better than specific benefits
conferred by legislation.
In the organization of a national system of sickness insurance, existing insti-
tutions must be taken into account. In fact, the present problem of sickness
insurance is, in some countries, to a large extent that of the reform or re-organization
14
of existing institutions, in order that they may become more effective and reach
a larger proportion of the working population. The habit of economy, though
naturally present in but few men, is capable of development in almost all, if suitable
opportunities for saving are afforded. This is done by compulsory sickness
insurance, which ofiers to the worldng classes the best method by which they can
provide for the times when illness prevents them from working. Such insurance
does not necessarily promise to do anything directly for the persons insured, but
merely offers a device by which they can aid themselves.
6. Accident Insurance. — Prior to the modern movement in the direction of
social insurance, the prevailing law of Europe was substantially that known as the
common-law liabUity of employers, and was founded on the ancient Eoman law
{lex Mquilia). This principle, briefly stated, was that the employer is liable only
for those accidents resulting directly from his fault or the fault of his agents, whose
orders the injured person was in duty bound to follow, the burden of proof being
upon the employe. It is scarcely necessary to call attention to the injustice of
this law under modern conditions, where the employe is often one of a large number
of men working in so complicated a system that it is often impossible to trace
responsibility. Under the above rule, therefore, it was, with few exceptions, upon
the employe that fell the loss caused by accidents ; and, as the development
of great industries progressed, the hardships of this regime became more and more
marked.
The first modification demanded was that the law be so changed that the
employer should be liable unless he could prove that he was in no way at fault.
It soon became apparent, however, that this measure would give but little relief
to the workmen, by reason of the fact that, in addition to the two classes of
accidents due directly to the faults of employers and employes, there was a third
class, namely, those due to the industry itself. This last class constitutes what is
called in Europe the risque professionnel, being the danger inherent in the prosecu-
tion of the industry itself. A considerable proportion of the total number of
accidents were found to be in this last class.
When this fact was recognised, it was argued that it was the industry which
caused these accidents, and that it was upon the industry that in some way the
support of their consequences should be made to fall. Moreover, so far as these
accidents were preventable by the exercise of forethought, the employer was chiefly
responsible, since it is the employer who largely determines the conditions under
which the industry is carried on, and the processes and tools that are used. When
1h's reasoning was accepted, the demand arose that the industry, that is the
employer, should be Uable for all accidents not clearly the fault of the employe
himself. The principle being established, it would seem that the employer's liability
could go no further.
Practical results, however, soon showed that the position of the employe had
undergone but Uttle improvement. The legal question had been solved, but the
social problem remained. As matters then stood, the workman could recover
damages by action at law only, with costly investigations ensuing each case of
accident and with tedious legal procedure and its consequent delays and uncer-
tainties. The desire for more certain and immediate compensation in cases of
accident grew apace. It is at this point that the agency of insurance has been
invoked. By this agency it is sought to compel employers either to insure their
employes in a State or private insurance institution, or themselves to maintain
insurance funds, and to thus secure the position of the workmen by establishing in
advance the amount and nature of the compensation to be granted, and by ensuring
its immediate payment. From a merely legal question, therefore, the liability for
accidents to workmen has, by a natural process of evolution, passed into a social
question, viz., that of workmen's insurance.
1.5
7. Insurance against Invalidity and Old Age. — Initially, the range of insurance
was only partial, to-day it covers in some countries nearly the whole field, excepting
insurance against non-employment. In the consideration of questions regarding
insurance against sickness and accidents, attention was necessarily drawn to
insurance against invalidity and old age, inasmuch as the whole system of social
insurance would be very incomplete if it provided only against temporary incapa-
bility the result of sickness or accident, and failed to take account of permanent
incapability to work resulting from invalidity or old age, for such cases would be
entirely dependent on charitable institutions.
An important difference between insurance against invalidity and old age and
insurance against sickness lies in the fact that workmen have failed to develop
any institutions similar to their sickness funds for the creation of invalid and old-
age pensions. Other essential features of invahd and old-age insurance, which
differentiate it from both sickness and accident insurance, lie chiefly in the principles
upon which any system for its provision must rest. These difierences will be
treated in the consideration of the organization and administration of the several
branches of social insurance (see especially Chapter XL, section 3, hereof).
8. Insurance against Unemfloyment. — Probably nothing shows the real economic
helplessness of the working classes so clearly as the fact that, though unemployment
is a condition which must be looked forward to by a large majority, and old age by
all, but few workmen are able by their unaided efforts to make suitable provision
for these conditions. Insurance recognises this fact, and seeks to provide a way
by which it can be remedied.
A perfect practical solution of the problem of insurance against unemployment
is up to the present, however, regarded as hopelessly difficult by all who have
seriously studied it, and it may be said that no one has apparently reached the
general principle for the solution of an economic difficulty so far-reaching and
one involving the safeguarding of the community against various changes associated
therewith.
9. Progressive Legislation. — Various European countries have given attention
to these weighty questions, and have made endeavours to solve the problems of
social insurance by appropriate legislation. As will appear hereinafter (see Chapter
II., sec. 1), a variety of circumstances have co-operated towards Germany taking
the lead in these matters. In order to attain the desired ends the beneficiaries
have themselves been put under the compulsion of contributing at least generally to
their insurance, and the rest of the community have also been compelled, either
through direct contribution or through general taxes to aid in this consolidation of
the interests of the working classes, as necessary for the well-being of the whole
social organism. The present state of things was not attained directly, but was
reached through a number of tentative steps. It is obvious that a complete working
scheme could not be established from d priori considerations, but was possible only
through the teachings of actual experience and by progressive legislation based
thereon, and a review of European experience shows that every step in such
legislation demands the most ample review as a condition precedent.
10. Initial Crudity and Incidence of- Cost. — The earlier trend of this legislation
has been shown, as will hereinafter appear, to be very unsatisfactory in many
directions, and this proved to be so especially in the legislation which operated to
fix responsibility for disaster. Apprehensions and oppositions to an all-embracing
compulsory insurance were found to be prevalent, and these resulted in a signal
crudity in the attempt to over-localize responsibihty, for example, in the case of
accident. This crudity is apparent in the disposition to specially load industries
which are exceptionally dangerous, but which are nevertheless essential to the
productive activities of the community, with the full measure of their responsibility
for the disasters that occur in connexion with them. And it may here be observed
that the fundamental principles of social insurance {see para. 2 hereof) aim at the
widest possible distribution over the community of extra risks in dangerous though
16
necessary industries, whereas localization of the full measure of liability upon any
particular industry (or class of employers) results probably in the higher price of
the goods produced, which increase in price would be distributed directly among the
immediate consumers of the products of that industry only, and not over the whole
industrial organization, excepting only indirectly and in a continually diminishing
degree. The burden of the cost of insurance does not of course necessarily fall
upon the one who actually makes the payments. If the incidence of cost be upon
the employer, it may appear in the higher cost of goods or service. This would
not necessarily mean a higher price for consumers, as is ordinarily assumed. More
correctly stated, it would perhaps result in either a diminution of profits or a higher
price. In connexion with the question of increased cost of production, the possi-
bility of increased eflfioiency and the resulting economy in cost under a system of
compulsory insurance must be considered. The expectation of superior efficiency
is merely a recognition of the value to society of the conservation of industrial
energy ; of the fact that sickness, accidents, and incapacity for work, so far as they
are preventable, are signs of industrial waste. The provision of medical and monetary
aid is not inconsistent with true economy in management, if higher efficiency
is thereby attained. This matter is referred to hereinafter {see Chapter XL, sec. 2).
It should also be noted that, even though the charges for insurance may result
in a higher cost of production, and may thereby react on the workman in an in-
creased cost of living, the workman is not a consumer to the same extent as he is
a producer. The argument that upon whomever the incidence of cost may fall
directly, it virtually comes to the same thing — viz., a tax upon the consumer — is
superficial and fallacious, but it has been only through systematic and far-reaching
consideration of all phases of the question that the inadequacy of such crude views
has been reahzed.
In invaUdity and old-age insurance the accounts of each year should not be
considered by themselves. To secure a proper determination of probable revenue
and expenditure necessitates calculations for a period of years in advance. It is
not just to make the contributions of each year meet the expenditure of that year.
One of the most frequent and dangerous errors made in the organization of pension
funds has been the neglect of this point, and the throwing upon the future, charges
that were really incurred in former years.
11. Social Insurance and National Destiny. — In brief it may be said that in
Europe there has arisen a sense of the intrinsic values of aU parts of the social
organism in relation to the whole, and in consequence a recognition of the neces-
sity of a common regard for the well-being of every part of the social organism,
not only as an end in itself, hut also in relation to national destiny. This social
apperception has led to a series of social experiments on a colossal scale, culminating
in a body of legislation, which, as experience showed the necessity, has been amended
from time to time, with some better degree of adjustment to the requirements of
the social organism. It is proposed therefore to disclose the progress which has
been made in various branches of this great modern effort, for without following
its history it is difficult to rightly appraise the value of the legislation or the position
of things attained.
12. Bibliography. — Bibliographical references to works which have been con-
sulted in the preparation of this Report and which will be of aid in a further study
of the principles of social insurance may be found in Appendix A hereof.
Section 2. — Extent or Social Insurance.
1. Scope first recognised. — The full scope of social insurance was first recognised
in Germany. This country was rapidly developing from an agricultural State
into an industrial one, and the consequences of this change brought the conditions
of workmen to a certain chmax, resulting in proclamations regarding socialism.
The law relating to sociaHsm passed in 1878 did not amend the condition of affairs ;
the socialistic vote steadily increased. It was not, however, until Bismarck had
come to the conclusion that the best way to counteract the growing influence of
17
fiocial democracy, whict he regarded as an evil, was to improve the social position
of the working classes as much as possible by means of measures introduced by the
government, that an extension of the principles underlying the creation of the
miners' funds above mentioned {see sec. 1-3) to the majority of the wage-earning
classes took practical shape. It was on the 17th November, 1881, that the Imperial
message recommending the establishment of various social insurance systems was
communicated to the Reichstag. The text of the message mentioned is, in extenso,
as follows : —
" In order to realize these views a Bill for the Insurance of Workmen against
Industrial Accidents will first of all be laid before you, after which a supplementary
measure will be submitted providing for a general organization of industrial Sick-
relief Insurance. But Ukewise those who are disabled in consequence of Old Age or
Invalidity possess a well-founded claim to a more ample relief on the part of the
State than they have hitherto enjoyed. To devise the most appropriate way and
means for making such provision, however difficult, is one of the highest obligations
of every community based on the moral foundations of Christianity. A more
intimate knowledge with the actual capabilities of the people, and a mode of turning
these to account through corporate associations, under the patronage and with the
aid of the State will, we trust, develop a scheme which the State unaided would
have found beyond its power."
This message re-expressed the conviction that the existing social disadvantages
could not be remedied solely by the suppression of socialistic agitation, but that
efforts to ensure the welfare of the working class would have to be made again and
submitted thus to the Imperial Diet. The message recognised that the State alone
would be unable to carry out the task, and demanded the co-operation of the whole
people afiected and their association in corporations under the care and the super-
vision of the State. It also recognised that the expenditure of considerable sums
on the part of the State would be necessary. In spite of great opposition, the full
scheme was put into practical form within ten years, so that to-day Germany
unquestionably leads the world in social insurance, and has prospered whilst she
built up the system, and probably to a large extent in consequence of it.
2. Acts passed in various Countries. — The first solution of the problems of social
insurance was thus carried out in Germany, and this example soon awakened the
feeling in many other countries that steps should be taken to institute systems of
workmen's insurance. The following statement shows how the different European
countries have followed suit ; the systems are voluntary, except where otherwise
specified : —
Laws on Workmen's Instjkance in Chief Cottntries.
Country.
1. Germany • .
2. Austria
3. Hungary . .
4. Italy
5. Finland
6. Holland ..
7. Norway
8. Sweden
9. France
10. Belgium
11. Great Britain
Sickness Insurance .
1883, 1886, and
1902, compulsory
1888, compulsory
1891 and 1907,
compulsory
1886
1897
1901
1891
1894, compulsory,
miners only :
1850, and 1898
1851 and 1894 . .
Accident Insursnice.
1884 and 1887, compulsory
1887 and 1894, compulsory
1907, compulsory
1898 and 1904, compulsory
1895 and 1902, compulsory
1901, compulsory
1895, compulsory
1891 ..
1898, compulsory, seamen
only
1868, compulsory, miners
only
1897 and 1906 (Workmen's
Compensation Act)
Invalidity and Old-age
Insurance.
1889 and 1899, compulsory
1889, compulsory ; miners
only
1854, compulsory ; miners
only
1898
1881 and 1894, compulsory,
seamen and miners only ;
1850, and 1886
1868, compulsory, miners
only ; 1850 and 1865
18
3. Comfulsory Insurance and Compulsory Organization. — A compulsory system
of insurance is not wholly free from objections. It involves a certain degree of inter-
ference with the liberty of the insured and of their employers. It has also been
feared that the prospect of compensation would create a certain negligence on the
part of workmen in regard to danger and also that employers would feel less respon-
sibility as regards avoiding dangerous conditions. These fears, however, did not
prevail against the fact that compulsory insurance was seen to be the most economi-
cal, and in fact the only way of enabling whole classes of workmen to have a just
claim on assistance in times of need. The question of compulsory insurance is
further discussed in Chapter XL, sec. 3, para. 3, hereinafter.
Compulsory insurance does not necessarily imply compulsory organization of
insurance, but German insurance legislation regarded compulsory organization as
the proper complement of compulsory insurance. Compulsory organization has
the advantage that unnecessary and expensive multiplication of organizations, such
as is inevitable in voluntary insurance organizations, is avoided. In general,
economical administration is better secured in proportion as the organized units
are large.
The following table shows the extent to which compulsory insurance and com-
pulsory organization have been adopted in the several countries : —
Compulsory Insttrasoe and Comptji.soey Organization.
Compulsory Insurance
with
Compulsory Organization.
Germany (Accident, Sickness, and Invalidity)
Austria and Hungary (Accident and Sickness)
liuxemberg and Norway (Accident)
Compulsory Insurance
without
Compulsory Organization.
Italy, Finland, and Hol-
land (Accident)
Principle of
Legal Liability still
prevailing.
Great Britain
France
Belgium
Spain
Denmark
A general afer^u in a comparative tabular form of the scope and chief features
of the more important systems of social insurance in force in various countries is
given in the Appendices to this Eeport. It is thought that occasional reference
to these Appendices will facilitate an appreciation of the salient features of the
various systems dealt with.
4. Contributory System. — With regard to sickness-insurance, in Germany,
Austria, and Luxemberg, workmen pay two-thirds of the contributions and
employers one-third, while in Hungary both parties each pay one-half. In Italy,
Finland, Norway, Sweden, France, and Belgium, the workmen pay the whole
of the premiums, and the State supplements the amount of the benefits.
The Austrian law on insurance against accidents requires workmen to pay
one-tenth .and employers nine-tenths, while Germany, Hungary, Luxemberg,
Norway, Italy, Finland, and Holland require the whole amount of the contributions,
to be paid by the employers.
Since insurance endeavours to prevent the consequences of certain risks, which
are profoundly influenced by the conditions of work and the character of the
management, it cannot, on principle, equitably demand the assistance of the
whole of the community. Its burdens must at least primarily be carried by the
parties concerned, viz., by the employers and workmen. But this does not imply
that the community shall not afford assistance either in the initial stages of
insurance or in a temporary financial disability of the insurance organization.
German insurance against invahdity and old age has deviated from the principle
indicated, by affording a permanent Imperial but relatively small .contribution t&
19
the annuities. The questions of incidence and cost are further dealt with in Chapter
X., sec. 3, of this Report.
5. Systems of Premiums and Assessments, and Financial Organization. — The
question as to the means by which the financial arrangements are to be made
depends on the circumstances of each country, and on the particular system of
insurance adopted. It may be asked whether the fund necessary for the pajrmenq.
of permanent annuities should be established in advance by regular contributions
calculated on technical insurance principles {i.e., on the system of premiums), or
whether it is sufficient to have a yearly assessment large enough to meet the actual
payments of annuities and the necessary contributions to the reserve fund {i.e.,
system of assessments). The first system promises greater security if the rate of
interest can be calculated in advance, but it renders the initiation of insurance
more difficult, in so far as the whole burden has to be undertaken from the very
beginning.
The second system renders the begimiing of insurance more easy, as the burdens
are initially light, but they soon rapidly increase, though later the rate-increase
diminishes, ceasing altogether after a considerable time. This system is sometimes
held in reproach as being financially unsound, a fault, however, which can be partly
obviated by the accumulation of large reserves. Experience has shown that both
systems have value, but that there are special circumstances in different countries
which may render the one or the other preferable. The system of assessments for
example, would be obviously unsuitable for small organizations or small countries,
since they could not be assumed to indicate average conditions, and would not be
suitable even for larger countries unless these are characterized by a great develop-
ment in their industrial conditions. On the other hand, it possesses great
advantages for large countries with a favorable progress in the whole range of their
industrial and social life. Germany has therefore adopted the system of assessments
in its scheme of insurance against accidents, while it did not follow it in the insurance
against invaUdity and old age, where contributions by workmen are of importance.
Hungary also adopted the assessment system in insurance against accidents.
Other countries in their insurance against accidents have preferred to accumulate
the required funds before initiating their insurance systems.
Another important point as regards financial organization refers to the system
under which provision is made for the payment of benefits extending over a number
of years. Provision may be made for the payment only of the money due during
the current year, leaving to the revenue of subsequent years the payment of the
sums due during those years ; or, on the other hand, as soon as the amount of a
pension is determined, a sum sufB.cient to provide for all annual payments of the
pension may be carried to a special fund. Germany has adopted the first of these
methods, while Austria and Hungary have adopted the second, which would appear
to be theoretically the more scientific system. The first method has the advantage,
however, that at the inauguration of a scheme of social insurance employers of
labour are not suddenly subjected to a new and heavy expense, and that the
necessity for investing sums of money in special funds is thus obviated. Under
the German method, the annual assessments must at first increase rapidly, since
•during each year there will have to be paid, not only the benefits due for accidents
occurring during that year, but also pension payments for accidents which occurred
during previous years. The charges under the first method would, however,
become constant after a period estimated at from 20 to 30 years, so that as regards
ultimate effects there is perhaps little to choose between the two systems. It
should be observed, however, that the second system, viz., that of making each
year responsible for all charges resulting from accidents occurring during it, not
only corresponds to the idea of justice, but also makes it possible to organize the
system upon a more accurate actuarial basb.
20
Section 3. — International Congresses on Insurance.
1. International Congresses on Social Insurance. — The importance which the
problems of social insurance are assuming in Europe is shown by the fact that there
have been no less than eight International Congresses, whose object was to discuss
all the fundamental questions of social insurance, viz., those held at Paris (1889),
Berne (1891), Milan (1894), Brussels (1897), Paris (1900), Diisseldorf (1902), Vienna
(1905), and Rome (1908).
The attendance at these Congresses is large, and their reports are voluminous,
and deal with a variety of aspects of the question.
A society has also been founded, and will meet this year to find, if possible, a
solution of the question of insurance against unemployment.
2. Other Congresses on Insurance. — Besides Congresses dealing specially with
social insurance, cognate matters of direct importance have also been dealt with at
other International Congresses on the science of insurance in general, and on
special features of insurance, such as insurance-medicine.
These were as follows : —
International C'iinqressks ox Insurance.
Locality.
Brussels
London
Paris
New York
Berlin
VieTiiia
Brussels
Amsterdam
Paris
Berlin
Reports.
Vols.
Pages.
(fenernl Insurance.
1
1
1
Insurance-Medicine.
386
685
200 and 157
471 and 276
1899
1901
1903
1906
Date.
504
1895
932
1898
1882
1900
1112 and 254
1903
820, 748, and
1906
40G
1570 and 870
1909
Sept. 2-6
May 16-20
June 25-30
August 31 ;
Sept. 10-15
June 7-13
Sept. 25-29
Sept. 23-26
May 25-28
Sept. 10-15
Sept. 5
3. Results of Congresses. — The organizers of these Congresses may look back
with great satisfaction upon the work and the results of these meetings. The
subjects discussed, both scientific and practical, at the different Congresses had
reference to accidents to workmen and workmen's insurance, as well as to the
far-reaching connexion of the latter with other institutions of modern civilization.
A considerable number of able experts have devoted their services to the great
ideas, which the Congresses consider it their duty to propagate, and their verbal
and written reports have greatly furthered the aims of these meetings. The
Congresses can indeed lay claim to great credit that the idea of working men's-
insurance has made remarkable progress in all civilized States.
A comparison of the programmes of the different Congresses will further show
how their fields of discussion were gradually enlarged. Amongst numerous smaller
Congresses dealing with matters concerning insurance there is one which may
influence the development of social insurance, viz., the Congress of officials of
sickness-funds and trade-unions.
21
CHAPTER II.— SOCIAL INSUEANCE IN GERMANY.
Section 1. — Introduction.
1. General. — A mere enumeration of the various associations and of the laws
dealing with workmen's insurance in Germany could not give an adequate picture
of the difficulties which had to be overcome, both in and outside Parhament, before
the scope of social insurance could be extended to its present dimensions. It will,
therefore, be desirable to briefly sketch the historical development of each
branch thereof and to outline the evolution of the systems now in force. It
may here be observed that a proposal for an insurance of great masses of the people
was unprecedented. There were no statistics at hand from which assistance could
be had. If, on the one hand, one cannot spare the organizers of this scheme the
reproach that, in the actual conditions, a gigantic work was started without
adequate investigation, it cannot, on the other hand, be denied that praise is due
for their poUtical foresight and their sociologic circumspection. Nobody regards
the insurance system in its present form as perfect, but, on the other hand, no
one proposes to dispense with it, although many may desire its revision.
2. Princifol Acts inaugurating Systems. — The three principal Acts inaugurating
the several branches of social insurance in Germany were urged through Parliament
in the course of nine years by the Government. The answer of one of the organizers
to the reproach that the whole procedure was unduly hurried was, that if the whole
scheme were not reahzed in Bismarck's time, generations would probably come and
pass away before the project could materialize.
That the entire scheme of workmen's insurance, based upon a single fundamental
conception, was not instituted by a single law, was not due to theoretical difficulties.
It was Bismarck's conviction that tactical reasons demanded a gradual building
up of the whole edifice, on the principle that " he who grasps too much greatly
hampers himself."
It was felt that had the Government announced its whole pohcy for this element
of social reform at one time, the opposition would, in all probability, have been too
strong to overcome. It was therefore considered wise to introduce the matter
step by step.
Despite great, in fact almost overwhelming, difficulties, the scheme was put in
a more practical form after the lapse of a very brief time by the Acts enumerated
hereunder : —
Germany. — Principal Act.s on Social Insurance.
Act for Insurance against Sickness
Act for Insurance against Industrial Accidents
Act for Insurance against Sickness and Accidents in Agricultural
and Forestal Industries
Act for Insurance against Accidents in Building Trades
Act for Insurance for Ships' Crews against Accidents at Sea . .
Act for Insurance against Invalidity and Old Age . .
15th June
6th July
5th May
nth July
13th July
22nd June
Year.
1883
1884
1886
1887
1887
1889
Besides the Acts above-mentioned, other Acts were passed in 1886 and 1901,
providing for the insurance of military officials and soldiers. An Act for the
insurance of prisoners was also passed in 1900, though this last, strictly speaking,
is not an ordinary Insurance Act, notwithstanding that it is based upon the idea
of insurance against accidents. Several important amending Acts have also been
passed from time to time ; these are further referred to hereinafter.
The Accident Instirance Bill and the Sickness Insurance BiU were originally
introduced in 1882 by the Government as a combined measure. The sickness
insurance part of the conjoint Bill, however, was passed alone on the 15th June,
1883, coming into operation on the 1st December, 1884. The accident insurance
portion of the original BiU was afterwards resumed in 1884, and was passed on
the 6th July of that year, coming into force on the 1st October, 1885. Though
these two measures were disjoined during their passage into law, they retain their
original unity, for they have been made co-dependent, accident insurance
supplementing that of sickness, and the period of inability to work constituting
the point where the one Act ceases and the other commences.
3. Fundamental Principles of Acts. — The fundamental principles of the German
system are compulsory insurance on the one hand, and far-reaching freedom of action
on the other. As a result of experience with voluntary insurance, compulsion was
deemed to he indispensable, inasmuch as under the voluntary system only the better-
paid and more thrifty classes of workmen were reached. The economically weaker
section could or would not pay the contributions. Reference has already been
made to the chief features of compulsory insurance and compulsory organization
{see Chapter I., sec. 2, para. 3 hereof).
According to the German law each insurance organization, whatever form it
may have adopted, must be under the supervision of the State, and in Germany
it appears to be an open question whether all such organizations wiU not in course
of time be transform^ into institutions wholly organized by the State.
It should not be overlooked, however, that the permission of independent or
local administration may minimize certain disadvantages, such as want of know-
ledge of local conditions and of facts concerning individual claimants for relief,
which disadvantages might ensue through centralised administration. Further,
an independent administration of the insurance organization becomes almost a
necessity when the organization of the whole scheme is based on the principle of
division according to trades. For in a division on that basis the value of local technical
and professional knowledge and experience can be adequately utilized only if the
organization is placed in the hands of the local sections of the different trades
or caUings, and is therefore voluntary. If the insurance scheme be organized,
however, according to local districts, then an adequate knowledge of local conditions
may be easily rendered available, and in such case compulsory organization is not
only appUcable, but is also the more economical. But in this case also independent
administration is of great value and should not be opposed, since it awakens not only
a general interest among those concerned in the best system of insurance, but also
discloses to them the features of independent administration under various circum-
stances, thus arousing a sense of power and of responsibility.
The fusion of trade sections or of local administrative sections into one system
for the entire State would not necessarily exclude independent local administration.
Such a fusion, however, is desirable only for a small State. In a large State it would
result in a cumbersome organization, owing to the large number of sections and of
insured persons. The experiments by which all existing organizations were utilized
in the working out of the new system have led to the creation of many subdivisions,
a fact conspicuous in insurance against sickness.
The administration and organization of the three branches of workmen's in-
surance is further dealt with under their separate heads.
Section 2. — Insurance against Sickness.
1. Early Experiments. — Experiments in introducing compulsory insurance
against sickness were made much earlier than in the other two branches of insurance.
In Prussia a regulation existed for various trades, as early as 1845, authorizing
municipalities to demand from workmen a compulsory contribution to sickness-
fands. Another law, passed in 1849, authorized municipaUties to compel manu-
facturers and owners of factories to form unions for the assistance of their workmen.
23
An Act passed in 1854 required the establishment of new funds by the municipaUties
and authorized the governments of the districts to introduce compulsion if necessary.
Other German States had also adopted similar methods, the great defect of which,
however, was that, although they were based on the principle of the establishment
of free funds, yet they allowed the municipalities to introduce compulsion. Legis-
lation during the years 1860 to 1880 aimed at a solution of this difficulty, without
abandoning the existing principles of compulsion. An Act for the regulation of
trades passed in 1869 declared it optional for independent manufacturers to enter
a fund, but retained all the existing regulations making the system compulsory
for workmen. A Bill relating to charitable funds, passed in 1876, sought to facihtate
the establishment of funds with voluntary membership, but a new Act on the regu-
lation of trades, which was introduced immediately after the Bill just referred to,
notjsnly retained compulsion, but brought it into another and more effective form.
2. Acts now in Force. — The last-named Act remained in force until a new Act
was passed in 1883 providing for sickness insurance on the basis of compulsory
membership ; amending Acts were passed in 1886, 1892, 1902, and 1903, the
amendments being based on experience gained in working out the scheme.
3. Chief Features of Acts. — All persons who are regularly employed in trades
or commerce for wages or salary not exceeding £100 per annum must be insured.
Employes who only work intermittently are generally not liable to be insured,
nor are persons in independent positions, however restricted their resources. Other
persons specifically exempted are soldiers and sailors, domestic servants (unless
they are called upon to do industrial work as well as house work for their employers),
and employes in Government or municipal service who are entitled to continued
payment in the event of illness. Persons otherwise liable may also be exempted
where they have made provision for sickness in other ways. The municipal
authorities may, however, extend the compulsory provisions to intermittent
labourers, to all persons in the municipal service if their wages do not exceed £100
per annum, to employes in the agricultural, forestal, and house industries, and
to members of an employer's family who work for him without a formal contract
of service. Persons not coming within the compulsory provision may insure
themselves if their yearly wages do not exceed £100, and when a person is once
insured he may continue the insurance, even though his income is increased so as
to exceed the exclusion hmit.
Where insurance is compulsory, it commences with the employment of the
worker, and is independent of sex and age. The insurance is broken when employ-
ment ceases, to be resumed when employment begins again. In 1906, there were
no less than 11,690,000 persons insured. The Act does not allow an insurer the free
choice of the organization in which he may insure ; he must become a member of
the particular association to which he should rightfully belong according to his
place of residence and the nature of his occupation.
The amending Act of 1892 extended the period for which benefits may be
granted to 26 weeks, thus filling a gap, which had occasionally occurred between
the assistance given by sickness-funds and the issue of an annuity for invalidity,
the date for the issue of which had been advanced by 26 weeks also.
The workmen pay two-thirds and the employers one-third of the premiums,
which are based on the rates of wages. In case of voluntary insurance, the employe
pays the whole premium.
Regulations have been prescribed regarding the payments to insured persons
whose sickness was caused by their own fault. The assistance in kind which
forms part of the benefits cannot be refused, not even in a case where it is proved
that the insured had contracted the illness intentionally. Such a procedure may,
however, influence the payment of sickness-money, but only on definite suppo-
sitions. The decision in such a case is left to the jurisdiction of the particular
insurance organization or fund. Payment can be refused, or only made partly
(during twelve months) to an insured person who is undergoing a penalty for having
committed a crime.
The difference between insurance against sickness and accident and invalid
insurance consists chiefly in the fact that the insurance against sickness has to
make payments of a more or less temporary character, and that it must therefore
be protected against claims for permanent assistance.
4. Organization. — For insurance against sickness the organization consists of
a considerable number of institutions. In order to suit the different branches of
modern industry, these are of various forms. In 1906, there were no less than
23,200 separate associations, inclusive of miners' clubs. These associations are
established in such a way that they can be easUy reached by any insured person,
and may be conveniently divided into six groups, viz. :^(i.) local sick funds
established by municipaUties or parishes for trades within their districts ; (ii.) ii^^us-
trial or factory sick-funds, conducted in connexion with large industries ; (iii.) build-
ing trades sick-funds ; (iv.) guild sick-funds ; (v.) miners' sick-funds ; (vi.) " omni-
bus " funds, established by the municipaUties and parishes for persons not insured
in any of the other five types of funds.
The relation of charitable organizations to the system of compulsory insurance
consists merely in the fact that membership, under certain circumstances, is
regarded as equivalent to the fulfilment of the legal duty of insurance in one of
the other types of associations. The law on insurance against sickness has adopted
the system of municipal sickness-funds as the principal form of its organization,
but a number of the compulsory associations against sickness may form a union
for the purpose of mutual help and self-government, conforming, however, to certain
rules defined by Statute.
5. Benefits Afforded. — The minimum scale of benefits afforded under the system
are : — (a) Free treatment and sickness money, amounting to 50 per cent, of the
average wages ; (6) lying-in women receive at the same rate as (a) during six weeks ;
(c) death benefit of twenty times one day's wages. In case of dispute, the matter
is settled by a supervisory board without costs for litigation. During the first two
" waiting " days, no pay is granted ; the longest period for which sick-pay is
granted is 26 weeks, after which, should incapacity continue, the UabUity for an
allowance is transferred to the accident insurance fund, though medical attendance
may continue for a year. Sick-pay is, as a rule, for working days only, but it may
be claimed for Sundays and hoUdays when employes are liable to work on these
days.
6. Numbers of Organs of Insurance, Members, and Oases of Sickness. — The fol-
lowing table gives particulars of the number of organs of insurance, the average
number of members, and the cases and days of sickness at quinquennial periods
since 1885 and for the year 1906 : —
Gekmany. — Insurance against Sickness — Numbebs of Organizations, Members,
AND Cases and Days or Sickness, 1885 to 1906.
Yeai
NilTTiher of
Insurance
Average Yearly
Number of
Cases of
Days of
Associations.
Members.
Sickness.*
In thousands.
In thousands.
In thousands.
1885
18,942
4,290
1,800
25,300
1888
20,468
6,400
1,760
29,530
1890
21,173
6,580
2,420
39,180
1895
21,992
7,530
2,700
46,470
1900
23,021
9,520
3,680
64,920
1905
23,127
11,180
4,450
88,080
1906
23,214
11,690
4,420
87,440
• Cases of
conflnemeut Includec
i.
'2b
7. Financial Statement of Operations, 1885 to 1906.— The following table gives
particulars of financial operations of sickness insurance organizations for the same
years specified in the preceding table : —
Germany.— Financial Operations op Sickness Insitrance Organizations,
1885 TO 1906.
Year.
1885
1888
1890
1895
1900
1905
1906
Bevenue.
From Con-
tributions
and
Total.
Entrance
Fees.
£
£
2,807,000
2,956,000
3,742,500
3,515,000
4,562,000
4,842,500
5,870,000
6,238,500
8,302,500
8,888,500
12,587,500
13,345,500
13,833,000
14,665,500
Expenditure.
On Com-
pensations.
2,370,000
3,078,000
4,202,000
5,141,000
7,893,500
11,612,000
12,0^11,500
On Coat of
Manage-
ment.
£
169,000
225,000
269,500
336,500
483,000
708,500
76fi,.500
Total.
£
2,611,000
3,886,500
4,566,000
5,695,500
8,579,000
12,692,000
13,212,000
Capital at
end of
Year.
2,998,500
3,898,500
5,261,000
7,819,500
10,148,000
11,510,500
• Not available.
These figures, together with those given in the previous table, show that in
1906 the average contribution received per person insured was £1 4s., while the
average compensation paid was £2 14s. 9d. per sick person, or 2s. 9d. per day of
sickness.
Section 3. — Insurance against Accident.
1. Legislation. — Reference has already been made (see Chapter I., sec. 1, para. 6)
to the inadequacy of legislation indemnifying workmen in cases of industrial
accidents. The common law granted no compensation in cases where persons were
killed or injured either accidentally or through their own negligence.
These evils led to the Act on Legal Liabihty of 1871. Although this Act was
a step in the right direction, it did not have the desired efiect. The so-called
" Fundamental Act " was originally introduced with the Sickness Insurance Bill
in 1882 (see sec. 2, para. 1, hereof). It was eventually passed on the 6th July,
1884, as a separate Act, and came into force on the 1st October, 1885. The principal
Act apphed only to the industrial trades (factories, foundries, mines, quarries,
docks, building yards, &c.) ; it was extended in 1885 to the whole of the post,
telegraph, and railway services, to dredging works, carriers, and the like ; in 1886,
to the agricultural and forestal industries ; in 1887, to the building trade, to
seamen and others engaged in seafaring pursuits.
2. Chief Features of Acts. — Accident insurance is now compulsory for all work-
men and foremen with annual earnings under £150 ; by special regulation the Act
may be extended to officials and small employers whose earnings are above the
amount specified. Trade associations may prescribe regulations for preventing
accident by taking precautionary measures under the supervision of a technical
inspector. The premiums are paid by assessments on the employers (who pay
the whole thereof), levied according to the total wages paid and the scale of risk
in the industry and establishment. This arrangement makes it to the interest of
individual employers to guard against accidents. Employers and workmen not
included in the compulsory provisions may voluntarily enter the funds.
Provision is made by the assessment on the employers only for the payment of
the money actually due during the current year. In order to provide for the initial
increase in the annual assessments under this system (see Chapter I., sec. 2, para. 5),
2')
the trade insurance associations were required to accumulate, within the first eleven
years, a reserve fund by annual instalments ranging from 300 per cent, of the
actual outgo for the first year, to 10 per cent, for the eleventh year. It was provided
that, after the expiry of the first eleven years, the interest on the reserve fund
should be added to the fund until the amount of such fund reached double the
annual amount required ; after that, the interest could be applied to cover the
associations' charges.
The classes of risk of the various establishments and the rates of contribution
by each class are fixed by the associations' General Court, subject to the approval
of the Imperial Insurance Department. The tarifi of risks is revised every five
years. Unpaid contributions are levied as municipal rates.
An employer becomes, ipso facto, a member of the trade association of his trade
and district from the day of his esfcabUshing an industrial undertaking, and his
liability to insure his workmen necessarily follows.
3. Benefits Afforded. — ^Compensation commences only at the expiration
of thirteen weeks after the occurrence of the accident, the sick fund or the
individual employer being responsible in the interval. The benefits afforded
are as follow : — (a) Free medical attendance, with medicines and remedies
and accident benefit of two-thirds of the average annual earnings ; or free
hospital treatment together with pension to dependent relatives. Originally
the pension could not exceed 60 per cent, of the yearly earnings, but this. amount
has been raised to 100 per cent, in cases of complete disablement. If the accident
should cause subsequent unemployment to the insured, his partial pension may
be converted into a full one. This, of course, is taking a step in the direction of
insurance against unemployment. (6) Death benefit of twenty times the daily
wages, and pension to dependent relatives up to 60 per cent, of daily wages.
Compensation is paid, even though there be negligence on the part of the
workman injured, but is not paid if the workman has intentionally caused the
accident.
4. Organization. — (a) Industrial Associations. — For insurance against accidents,
all employers are united in professional or trade associations, which are constituted
under the supervision of the Imperial Insurance Department. In these associations
there exists a feeling of solidarity, and owners of small factories and workshops are
well supported both financially and socially by the owners of great industrial
estabhshments. Within these associations exist special insurance ofiices which
have to deal exclusively with the building trade and with seamen.
(6) Special Boards for Public Departments. — In addition to these trade associa-
tions, there are special organizations for some of the pubUc services, undertaken
either by the Empire or the Federated States, viz., for the post, telegraph, and
telephone services, for the naval and military forces, for the railways belonging
either to the Empire or to any of the Federated States, for the inland shipping
concerns, and for the enterprises of the Empire or the States in agriculture and
navigation, so far as these are included in a " professional association " by decree
of the Imperial Chancellor or of the respective central administrations.
A special organization also deals with workmen employed in buildings undertaken
by the Empire, the Federated States, or other communities, if the employes are not
already included in one of the " professional associations."
5. Number of Persons Insured, 1886 to 1906. — In 1906, the accident insurance
trade associations, excluding the agricultural and forestal industries, comprised
659,935 factories, with 10,719 manufacturers voluntarily and 137,561 compulsorily
i nsured ; the average number of employes insured in these factories was 8,459,443.
In the agricultural and forestal industries, there were 4,659,789 separate concerns.
with 11,190,000 persons insured ; in the special executive boards there were
912,642 insured persons. The total number of employes insured in 1906 was
therefore as follows : —
Germany. — Accident Insurance — Number of Employes Insured, 1906.
Professional and
Trade Associations.
8,459,443
Agricultural and
Forestal Industries.
11,190,000
Special Boards.
912,642
Total.
20,562,085
The workmen insured in the special boards comprised 458,071 employes in the
State railways and post and telegraph services, and 60,121 members of the army
and navy.
The following table shows the development in the numbers of persons insured
in the trade associations and in the agricultural and forestal industries at different
periods since 1886 : —
Germany. — Accident Insurance — Persons Insured in Trade Associations,
Agriculture, and Forestry, 1886 to 1906.
Particulars.
Trade Associa-
tions
Agriculture and
Forestry
1886.
Thousands.
3,820
Thousands.
4,650
5,700
Thousands.
5,380
-8,300
1895.
Thousands.
5,880
12,510
Thousands.
7,470
11,420
Thousands
8,459
11,190
6. Financial Statement. — The following table gives particulars of financial
operations of accident insurance for quinquennial years since 1885 : —
Germany. — Financial Statement of Whole of Insurance against Accidents.
Particulars.
Receipts.
Assessments paid by Employers
Total Receipts
Expenditure.
Compensations paid
Cost of Administration, &c.
Total Expenditure
Fmtde.
Total at end of year
1886.
1890.
1895.
1900.
£
£
£
£
48,500
50,000
1,990,000
2,126,500
3,211,500
3,688,000
4,589,000
5,272,500
1,000
49,000
50,000
1,175,000
313,500
1,488,500
2,522,000
503,000
3,025,000
4,367,500
676,000
5,043,500
*
3,290,500
7,170,000
8,493,500
7,891,000'
8,948,500
6,807,500-
1,695,000
8,502,500
12,930,000>
ITot available.
In 1906 the assessments paid amounted to £8,336,640, or an average of
88. Id. per person insured ; compensations amounted to £7,148,500, and were paid
to 854,680 persons injured, and to 74,000 widows, 103,564 children, 3,882 parents
of those killed.
28
Section 4. — Insurance against Invalidity and Old Age.
1. Legislation. — Invalidity may imply either total incapability for work or only
leduced strength in the workman, such that he is no longer able to earn his whole
living. Invalidity caused by exhaustion of strength or mental capacity may
occur at different stages of human Hfe, but is generally the result of old age.
Legislation in Germany regarding invalid-insurance was not instituted gradually,
as was accident-insurance, but came at once into full force by an Act of 22nd June,
1889. This required, therefore, from the very beginning a complete organization,
embracing all the circles which were concerned in it, and this organization was,
consequently, the subject of long parhamentary struggles. In certain branches of
employment, however, such as the mining industry and railway corporations, funds
had abeady been instituted for the insurance of workmen (against invalidity caused
by old age) before the Act referred to was passed.
Practical experience soon showed defects in the system established by the Act
of 1889, but it also showed the best means for the amendment of such defects.
Accordingly, an amending Act was passed in 1899. It may here be observed that
no Act dealing with any branch of social insurance was received more unfavorably
by the Reichstag than the Invalidity Insurance Bill of 1889, and it was finally
adopted by a majority of 20 votes only ; how great the change in pubUc opinion
regarding this Insurance Act has been is evidenced by the fact that, on the reading
of the amending BiU in 1899, only five votes were against its adoption. On this
occasion, the Social-Democrats voted for the first time for the acceptance of an Act
on Workmen's Insurance.
Besides providing for a better organization, the amending Act of 1899 included
an increase in the armuities and decrease of the waiting-time, an extension of the
compulsion to officials, teachers, small employers, and home-workers, and a closer
connexion with the insurance against sickness. InvaUd insurance had from the
time of the original Act embraced large masses of the population, and the Act of
1899 widened still further the circle of insured persons.
2. Features of System. — AU wage-earners over sixteen years of age, and with
annual incomes of less than £100, must be insured ; small employers, teachers and
tutors, ships' officers, and persons employed in household industries are also included
in the scheme. Provision is also made for the voluntary insurance of tradesmen
and small employers not included in the compulsory clauses. The premiums are
paid in equal proportions by employers and employes, and the Government adds
£2 10s. annually to each pension paid.
The persons insured are divided into five wage classes, for which the
combined weekly premiums, payable half by the worker and half by the employer,
are as foUow : —
Gebmany. — Invalidity and Old-aob Insurance — Premiums and Wage Classes.
Annual Wages
Up to £17 108.
From £17 10s.
to £27 10s.
From £27 10s.
to £42 108.
From £42 IDs.
to £67 10s.
Over £67 10s.
Total Premium . .
d.
1-68
d.
2-40
d.
2-88
(1.
d.
4-32
The premiums are levied in the form of stamps sold at post offices and special
agencies ; these stamps are affixed to receipt cards, which the insured are bound
under penalty to use. The employer deducts a workman's premiums from his
wages, and when the wages are paid the stamps must be affixed to the cards.
29
3. Benefits Afforded. — Invalid insurance is really an institution for invalid-
annuities. The two cHef methods of relief are, therefore, the annuity for permanent
or temporary invalidity, if such results in incapacity to earn one-third of the
normal wages, and the annuity for old age, which begins at the end of the
70th year of age of the insured. Admittance to an invalid-home can take the place
of the payment of an annuity. As it is of great importance that the capacity for
work should be recovered as soon as possible, and that its loss should even be
prevented in some degree, the insurance institutions have the right to insist that
the insured shall submit to any medical treatment which promises to bring about
such an issue.
The in.sured must follow the prescribed regulations. The treatment may
consist in being sent to a hospital or convalescent home, which, however, can be
done only with the consent of the insured. In such cases, payments have to be
made to the family of the insured, amo\m.ting to one-half of the insured's claim in
the sickness-fund, or, if he be not a member of any such institution, the payment
is equal to only one-quarter of his average daily wages.
The benefits aSorded may be summarized as follow : — (a) Invalid pensions for
persons incapacitated for work after they have paid premiums for 200 weeks.
(6) Old-age pensions for members of over 70 years of age after they have paid
premiums for 1,200 weeks, (c) Free treatment in order to prevent incapacity for
work, together with aid to dependent relatives. (d) Repayment of half the
premiums in case of death, accident, or marriage of an insured woman, if the
pension has not yet fallen due. In case of dispute, the matter is settled by
arbitration without cost to either party.
The minima amounts of the annual pensions (including the Imperial sub-
sidies) in the various wage-classes are as follow : —
Orrmasy. — Minima Amounts of Invalidity and Old-age Pensions.
Wage Class
I.
II.
III.
IV.
V.
Invalid pension
Old-age pension
£ .1. d.
5 10
5 10,
£ .«. d.
fi
7
£ s. d.
6 10
8 10
£ s. d.
7
10
£ s. d.
7 10
11 10
The amounts of the invaUd pensions may be increased, according to the
duration of the contributions, until they reach the maxima (after 50 years) of
£9 5s., £13 10s., £16 10s., £19 10s., and £22 10s. in the five classes, respectively.
If the insured belong to a sickness-fund, the assistance to be given by that fund
can be transferred to the invalid insurance, pending the duration of medical
treatment. This would take place in such a way that the sickness-fund would pay
to the invalid insurance the whole amount of the insured's claim for sickness
benefits. All costs exceeding this sum would have to be borne by the invalid
insurance.
In some cases this transfer might be vice versd, viz., so that this medical treat-
ment could be carried out by the sickness-funds to which the insured belongs, on
the condition that the money spent in excess of his claim on the fund be returned.
Medical treatment to prevent incapacity to work in cases of accidents may be
substituted for assistance given under accident-insurance, the latter institution
having to refund aU expenses for such medical treatment occurring after the
fourteenth week from the time when the accident took place.
4. Organization. — Insurance against invalidity and old age has, by German
legislation, been arranged, for administrative purposes, according to territorial
divisions. It was to be expected that the organization of invalid-insurance for
30
such large numbers of people would present great difficulties. The idea of an
Imperial Institution was abandoned, though it was recognised that its realization
would have offered certain conspicuous advantages, as, for example — (o) more
freedom to workmen in accepting work in the different German States without,
in any way, prejudicing their insurance, and (6) a greater degree of assimilation of
the social conditions in the different States, which at present exhibited marked
differences. But the organization of so great an institution as an Imperial system
of insurance against invalidity would have necessitated, was regarded as practically
impossible. Furthermore, it was considered that it would not have conformed to
the spirit of the Imperial Message, since all forms of self-administration would
necessarily have to be discarded. This, it was thought, would not be advisable in
a system of insurance in which the bulk of the contribution is to be paid by
employers and workmen together. To associate insurance against sickness, with
invahdity insurance, was considered impossible, on account of the dissimilarity
in the groups of persons embraced by the two different kinds of insurance ; it
would also have encountered serious difficulties in other directions.
The association of insurance against accidents with invahdity insurance, on the
other hand, would prove easier on account of the extension of accident-insurance
over large districts, but the organization of invalidity insurance according to
occupations and trades did not appear to be advisable, because of the fact that the
special dangers with which invalidity insurance has chiefly to contend do not stand
in close relation to occupation. These reasons explain why invahdity insurance
has been organized on the basis of self-administration for large districts. These
districts are large enough to minimize the difficulties which occurred before, when
a workman migrated from one German State to another, in which there was a
marked difference in the social conditions.
The organizations for invahdity-insurance are the State insurance offices,
numbering 31, of which the different States possess the following numbers : —
Geemany. — Teekitokial Organizations fob Invalid and Old-age Insukance in
DiEFEKBNT STATES.
Prussia
. 13
Oldenburg . . 1
Bavaria
. 8
Brunswick . . 1
Saxony
1
Alsace and Lorraine 1
Wiirtemberg
. 1
The Mecklenburgs . . 1
Baden
1
The Hanse Towns . . 1
Hessen
. 1
The Thuringian States 1
These organizations, covering different Territories, are mutual in character,
and are self-governing under the supervision of the Imperial Insurance Department.
Nine special funds have been constituted for miners and State railway employes.
5. Contributory System and Revenue. — Out of every 1,000 weekly contributions
the following numbers were in the different wage-classes comprised in the 31
insurance institutions : —
Germ any. — Invalid and Old-age Insurance — Incidence of Numbers op Contributions
ON DrPFERBNT WaQB CLASSES.
Wage Class
I.
II.
III.
IV.
V.
1891
253
384
217
146
*
1896
221
385
241
153
*
1901
179
336
239
162
84
1906
127
290
244
183
166
Not available.
31
It may be noted that the total number of weekly contributions increased from
427,200,000 in 1891 to 639,900,000 in 1906.
Out of £100 of premiums paid contributions came on the different wage-classes
as follows : —
Germany. — Invalid and Old-age Insurance — Incident of Amounts of
CONTBIBUTIONS PAID BY DIFFERENT WaQB CLASSES.
"Wage Class
I.
II.
III
IV.
V.
£
£
£
£
£
1891
17 06
36-87
24-98
21-09
*
1896
14-59
36-40
27-29
21-72
*
1901
10 90
29-40
25-09
21-35
13-26
1906
7-15
23-58
23-87
22-39
23 06
* Not nvailable
The annual revenue from premiums paid by employers and employes (one-half
each) for the whole invahd insurance was as follows : —
Germany. — Invalid and Old-age Insurance — Revenue from Premiums,
1891 TO 1907.
Year
1891.
1896.
1901.
1906.
1907.
Revenue
£
4,698,500
£
.5,045,700
£
6,740,500
£
8,065,000
£
8,900,000
For the seventeen years from 1891 to 1907 the contributions reached a grand
total of £108,450,000.
6. Annuities and Payments Granted. — In addition to the payments mentioned
in paragraph 3 hereof, the Imperial Act on invalid-insurance allows wealthy
insurance institutions to increase their assistance to the families of insured
persons, or to extend their payments to Sundays and hohdays, and, further, to pay
costs for burial, &c. These payments were not originally prescribed in the
Insurance Act, but are granted in the interest of all concerned in the respective
insurance institutions.
The grants are made on the supposition that the respective insurance institutions
have more money at their disposal than is essential merely for such payments as
are legally necessary. In 1906, these grants amoimted to £31,330, and consisted
chiefly in compensations to families of persons who were undergoing medical
treatment in hospitals.
The total amount of the payments made for invalid insurance is very great.
Up to the end of 1907, there were 2,050,000 annuities granted ; these comprised
1,520,000 permanent invalid-annuities (sickness annuities) and 459,394 old-age
annuities.
On Ist January, 1908, there were still current 978,960 annuities, comprising
841,992 invalid annuities, 20,081 sickness annuities, and 116,887 old-age annuities.
32
The following figures will show the rapid increase in payments made by way of
benefits under the system of invalid and old-age insurance, viz. : —
Germany. — Invaud and Old-agb Insurance — Total Payments Granted,
1891 TO 1007.
Year
1891.
1896.
1901.
1907.
Payments granted
£
765,000
£
2,565,000
£
5,265,000
£
8,600,000
To the extent of about one-third these disbursements are covered by the
Imperial contribution, viz., out of £66,400,000 paid to the end of 1906, £21,779,000
was paid by the Imperial contribution.
7. Total Payments made since Inauguration. — Inclusive of medical treatment
nursing in invalid homes, and money contributions, the total payments made for
invahd and old-age insurance up to the end of 1906 amounted to £66,410,500,
viz. : —
Invahd annuities
. 39,356,500
Old-age annuities
18,715,000
Sickness annuities
770,500
Contributions
3,411,500
Medical treatment
3,952,000
Nursing in invalid homes
64,500
Other payments
140,500
£66,410,500
8. Particulars of Medical Treatment. — From 1897 to 1906, 356,834 persons
underwent treatment for avoiding incapability to work, the expenses for such
treatment amounting to a total of £4,368,000. In the year 1906, the amount thus
expended was £790,000, exclusive of payments made to the families of the insured,
wMch payments amounted to £58,000. The amount paid for such treatment was
1'6 per cent, of the income in 1897, while it amounted to 7" 9 per cent, in 1906.
The numbers of persons who underwent medical treatment of this character were
10,600 in 1897, 33,000 in 1901, and 67,000 in 1906.
To give practical effect to such treatment, 19 insurance institutions and 5
specially authorized sickness-funds have established 27 sanatoria for tubercular
patients, and 26 other sanatoria, convalescent homes, hospitals, &c. The insurance
institution of Hanover alone possesses 5 sanatoria for consumptives, and a con-
valescent home for anaemic and neurotic women who are in want of recuperation.
The insurance institution of Berlin has estabhshed 2 sanatoria for consumptives,
and 2 sanatoria and hospitals for men, and in a similar manner other insurance
institutions have their own establishments. These facts indicate the attitude of
the insurance organizations towards tubercular diseases, which are regarded as a
specially dangerous menace to health.
Invahd insurance also pays contributions in certain cases where an annuity
cannot be granted.
33
Section 5. — Summary.
1. Number of Organizations. —The whole number of organizationa in connexioa
■with social insurance in Germany is as follow :—
Gebmany.— Ntjmbek op Oeganizations foe Social Insurance.
(a) Insurance against Sickness.
Municipal insurances against sickness . .
Municipal sickness-funds
Sickness-funds for factories
Sickness-funds for building trade
Sickness-funds for guilds
Registered charity funds
Legally registered sickness funds
Total number of organizations
(6) Insurance against Accidents.
Associations according to occupations . .
Sectional associations
Insurance offices
Agricultural and forestal associations
Association sections . .
Executive boards
District and municipal boards
Total number of organizations
Honorary officials (confidential agents) . .
(c) Insurance against Invalidity and Old Age.
Insurance offices
Funds . . . . . . . . . . \
Total number of organizations
Grand Total of organizations
8,528
4,699
7,626
52
639
1,445
225
23,214
349
14
48
583
198
289
1,547
25,687
31
9
40
24,801
2. Numbers Insured and Amounts Paid. — The following table shows the numbers
insured and the amounts paid in the whole of the German workmen's insurance at
the end of 1907 :—
Germany. — Social Insurance — Total Numbers Insured in all Branches.
Particulars.
Number of Persons.
Whole population
Wage earners
Insurance against sickness
Insurance against accidents
Insurance against invalidity
62,000,000
15,500,000
12,500,000
19,000,000
14,000,000
C.12281.
84
Germany. — Social Insurance — Total Benefits Paid in all Bbanohes during 1907.
Benefits, &c.. Granted lor-
Insnranoe against sickness
Insurance against accidents
Insurance against inTalidity
Total
Amount.
13,900,000
7,500,000
8,600,000
30,000,000
The number of benefits and compensation paid in 1907 was distributed as
follows : —
Germany. — Number of Persons receiving Benefits and Compensation in 1907.
Cases of sickness . . . . . . . . 4,800,000
Cases of accidents
Annuities for Invalidity
Annuities for old-age
Annuities for sickness . .
Total . .
887,921
841,992
116,887
20,081
6,666,881
The total number of cases benefited by the various branches of social insurance
since the introduction of the difierent insurance laws to the end of 1907 was
81,000,000. The total benefits and compensations paid amounted to £315,000,000.
Workmen have only paid less than half of the contributions, while the compensations
paid to them have already exceeded their contributions by £135,000,000.
These favorable conditions for German workmen have been obtained by means
of the obhgation placed on the employers by German legislation in social insurance
to find the greater part of the costs supplemented, however, in the branch of invalid
and old-age insurance by an Imperial contribution, amounting to £2 10s. Od. per
annum for each pension paid.
3. Future Develofments. — That such organization ' as has been indicated is too
complicated, and that with so large a number of subdivisions, a general supervision
is difficult, is a fact about which there is no difference of opinion. The desirability
of simplifying it and in this way diminishing the expenses, of management, is also
admitted. It is therefore, not remarkable that soon after the introduction of the
whole system of social insurance in Germany, projects to simphfy the organization
were formed. Conferences were held for the discussion of these matters and difierent
reports were furnished thereat dealing with social insurance, but as yet no way has
been found for satisfactory reform.
Besides the efiort towards unification of the difierent systems of social insurance,
there are still other aims to be pursued, as for example, the provision for widows'
and orphans' funds as well as the most difficult of the social problems, viz., the
insurance against unemployment.
The German workmen's insurance has, in the opinion of both German and non-
German experts, prevented much misery and distress among the labouring class,
not only by its direct intervention, but also by its indirect hygienic and economic
efiects. In fact, the latter probably hold the premier place in contributing to the
improvement of the vital energies, the production, the financial position, and the
general social condition of the worldng classes, thereby ameHorating in a sensible
degree the social and economic condition of the entire nation. These matters are
further dealt within Chapter XI. hereof.
35
CHAPTER III.— SOCIAL INSURANCE IN AUSTRIA,
Section 1. — Introduction.
1. Early Organizations. — Social insurance in its modern sense came under public
attention in Austria, as in other European countries, towards the end of the last
century. The present Austrian systems of accident and sickness-insurance resemble
the German, but differ from them in important details, and are not so fully
developed.
The first attempt to establish existing insurance institutions in Austria on a
practical insurance basis was made in 1859, with the object of abolishing the chari-
table basis and the somewhat primitive assistance provided by the guilds. A
similar attempt was again made in 1867.
These attempts initially had regard only to insurance against sickness, insurance
against accidents being separated therefrom only after Germany had set the example.
Even as early as the 16th century certain sickness-funds existed for working men,
to which the latter paid weekly contributions. But there was no practical con-
nexion between the amounts of contributions and the benefits afiorded, nor was
there a sufiicient separation of the insurance from other and quite different aims.
Other forms of assistance, both in regard to unemployment and sickness, existed
in Austria at a comparatively early date, but such institutions were estabKshed
chiefly for the benefit of the workmen in certain specified trades, while in cases of
need or sickness all other labourers were left to themselves or had to depend on such
charitable assistance as was given to the poor.
2. Acts of 1852 and 1867. — In 1852 an Act was passed providing for the estabhsh-
ment and regulation of funds, but it did not permit the development of free funds.
Regulations were passed in 1859 obhging all employers in certain trades with more
than twenty workmen in their establishments to institute a special fund for the
assistance of their employes, or to join some existing sickness-fund. Regulations
were issued at the same time regarding the funds of the guilds, but both these
regulations were found to present great difficulties in practice. The small contri-
butions and the non-existence of capital funds had the natural result that the
compensations could be only very small and, in many cases, had even to be refused
altogether. A change for the better was inaugurated by an Act passed in 1867.
This Act, though retaining some of the regulations of the old (1852) Act, treated
all sickness and invalidity funds as charitable organizations, of which the by-laws
had only to be duly acknowledged and did not require the special permission of
the Crown. As a consequence, the rapid development of the free funds followed,
but was interrupted in 1882, when regulations were passed again adopting the
principles of the 1852 Act.
3. Acts now in force. — It was not denied that the provisions of these early Acts
proved quite inadequate in view of the great development of industry and trade,
and various proposals for reform were advanced from time to time. None of these
proposals, however, acquired the force of law, though amending Bills were introduced
in 1883 and 1885 ; meanwhile public opinion turned in favour of the introduction
of compulsory insurance on the German pattern. Compulsory insurance against
accidents was established in Austria by an Act passed oh the 28th December, 1887
(amended by Act of 20th July, 1894), and compulsory insurance against sickness
by an Act of 30th March, 1888 ; whilst the regulation of miners' funds was dealt
with by an Act passed in the 28th July, 1889. These Acts have not had any effect
on the authorized charity funds, which are still organized on the basis of the old
Acts, and have not yet undergone any transformation.
There is no general old-age pension system in Austria as yet, but the movement
to estabhsh one, carried on since 1891, promises rehef in the near future. By an
Act of 1889, old-age pensions for miners were made obhgatory.
B2
36
Section 2. — Insurance against Accidents.
1. General. — The increasing desire for insurance against accidents brought about
the establishment of several associations which however, did very Uttle business, a
fact easily understood when it appears from the inspectors' reports, that accident
insurance embraced only a small fraction of the various industries, and was not in
existence in the more dangerous branches, such as the engineering industry and
iron-works. "While the years 1884 to 1886 show very httle progress, there was even
retrogression in 1887, owing to a number of the employers, in view of the impending
introduction of compulsory insurance, faiUng to renew their agreements.
The Acts of 1887 and 1894 made accident assurance compulsory for workmen
in trades with earnings less than £100, and apphed also to agricultural workmen
in cases where inanimate power is applied to farm machinery. Employers and
workmen who are not obhged to insure, may voluntarily do so in the same funds,
if the income does not exceed the limit specified.
The Act of 1894 extended insurance against accidents to about 200,000 additional
persons, almost half of whom belong to the railways. Since then, efforts have con-
tinually been made to enlarge the circle of insured persons and the radicals among
the working-men have definitely accepted the principle of an extension of com-
pulsory insurance against accidents to all wage-earners, and eventually to all small
tradesmen in their programme. At the same time desires have been expressed that
the term " industrial accident " should be abandoned, and that every accident
should be entitled to compensation. These efforts towards the extension of insurance
against accident may partly be attributed to the absence of insurance against
nvaUdity.
2. Organization. — The organization of the Austrian insurance against accidents
is based on the territorial principle ; in this it differs from the German system,
under which the associations are composed of employers in the same industries
without regard to locahty. With the introduction of the Act came the estabUsh-
ment of seven territorial institutes, and these have remained unchanged up to the
present. Certain institutions organized by trades have, however, been admitted ;
of these, the Institute of Insurance against Accident of the Austrian Railways is
the only one which has attained any importance.
The territorial principle in practice has met with many opponents, who wish to
see the organization based on the principle of professional and trades unions, in a
mamier similar to that which has been introduced in Germany. The bulk of public
opinion, however, is still in favour of the territorial principle, and the wish has been
widely expressed that the territorial principle should be the basis for the organiza-
tion of all branches of insurance. In administration the territorial organization
shows certain defects, chief among which is the absence of a supreme authority to
decide disputes arising from claims for compensation. The arbitration courts of
the different institutions up to the present frequently reach decisions on different
legal principles.
In another respect the Austrian system differs from the German ; for in Austria
assessments are made according to the total liabihty incurred during each year, and
are paid into a fund, while in Germany each year is charged with the payments
made during its course {see Chapter II., sec. 3., para. 2 hereof). In Austria, againj
the employers pay 90 per cent, and the employes 10 per cent, of the cost, while in
Germany the employers pay the whole. The rates in various industries vary with
wages and degree of trade risk.
3. Benefits Affordei and Particulars of Operations. — The benefits afforded are
pension, after the fifth week,^up to 60 per cent, of wages ; and in case of death a
pension to the dependent relatives of the deceased up to 50 per cent, of wages, with
a death benefit not exceeding £2 2s. As in Germany, all accidents are indemnified
37
-without need to prove negligence ; disputed cases are settled without cost by arbi-
tration courts. In 1905, there were 408,622 different establishments, insuring
2,800,000 workmen. The premiums paid were £1,440,000, or 10s. 4d. per person
msured, and £960,000 was paid out to 62,968 injured employes (having 7,475
widows, 10,247 children, and 806 parents dependent).
Section 3. — Insurance against Sickness.
1. General. — Under the Act of 1888, sickness insurance is compulsory for
•workmen a^d foremen in manufactures, and optional for employes in agricultural
and house industries. An amending Act of 1897 extended insurance against
sickness to small manufacturers, and enabled independent tradesmen, who belonged
to an association, to enter the compulsory insurance funds. The annual premiums
amount to 3 per cent, of the workmen's wages, and are paid, as in Germany, two-
thirds by workmen and one-third by employers.
2. Organization. — The organization for sickness insurance in Austria is totally
different from that for accident insurance. Sickness insurance is efiected by means
of local associations on a basis of mutuality and self-government. The number
of sickness-insurance institutions is, therefore, much larger than for insurance
against accidents, and there are also a great number of difierent funds. Decen-
trahzation is more acutely felt in this branch of insurance, and, with regard to a
supreme authority, the same defect is felt as in insurance against accident (see
sec. 3, para. 2 hereof). The composition of the arbitration courts which have to
decide in matters of claims for compensation is inadequate, because the judicial
element is not represented in them, and they are beheved to be often incompetent
to pronounce sound judgments.
3. B&nefits Afforded. — The benefits afforded are free treatment and sickness
pension or free hospital treatment and benefits to dependent relatives. The period
for which reUef is granted may not exceed twenty weeks, and the amount of the
benefits may not exceed 60 per cent, of the wages customary in the particular
locaHty. The death benefit is twenty times a day's wages. Disputes are decided,
as in accident insurance, by arbitration courts without cost.
4. Particulars of Operations. — In 1905, there were 2,934 organizations for
sickness insurance in Austria, having a membership of 2,840,000 persons. In the
same year, there were 1,530,000 cases of sickness amongst persons insured, while
the days of sickness amounted to 26,980,000, or an average of 17 '6 days per sick
derson. The total revenue of the organizations was £2,513,750, of which £2,350,000
was received by way of premiums ; the total expenditure was £2,430,000, of which
£2,126,000 was paid in benefits, &c., and £200,000 for administrative expenses.
The capital amounted to £2,000,000 in 1906.
At the end of 1905, the following annuities were current : —
Austria. — Accident and Sickness Insurance — Annuities Current, 1905.
Particulars.
Number of Annuities.
Yearly Amount.
Average Annuity
per Potsob.
Permanent invalids
Widows
Children
Parents and grand-parents
No.
62,968
7,475
10,247
806
£
506,667
65.417
57,083
5,000
£ «. 4
8 1
8 8 9
5 11 4
6 11
Total
81,496
656,667
7 15 6
33
The total amount of premiums paid in both branches of insurance from their
initiation up to 1905 was £39,833,000, and the benefits during the same period
amounted to £27,585,000. The average number of persons insured against sickness
in 1905 was 2,840,000, and against accidents was 2,810,000.
5. Recent Developments. — Efforts are being made to extend the system of
insurance against sickness. An important extension which is proposed is to
embrace those temporary labourers in agricultural and forestal undertakings,
■who do not come under the regulations for servants, an exemption which might
have unfavorable consequences on the social economy. The estimates made m
the programme assume the number of persons in these two branches who would
participate in the insurance to be 5,200,000 persons, which naturally means a
most important increase in the total of 2,840,000 persons who are at present members
of the insurance against sickness. Voluntary insurance against sickness, developed
on modest lines up to the present, does not meet with much consideration in the
programme. It is intended that voluntary insurance against invalidity and old
age, on the contrary, shall be assisted by bestowing the right of insuring on a
variety of classes of persons and by granting the right to continue an insurance
in a voluntary way, after the expiration of the time of compulsion.
Section 4. — Miners' Funds.
1. General. — Old-age pensions were made compulsory for persons working in
mines by the Act of 1889 already referred to, and which has been amended several
times. Old-age pensions have not yet been extended in Austria to persons other
than those engaged in mines.
2. Chief Features of System. — Under the Act of 1889, the organization of the
old miners' funds has been partially transformed on a practical insurance basis.
The transformation of the old institutions has, however, only taken place gradually,
and is even now not quite complete. Experience has shown that these institutions
are not generally in a position to respond to the fuU extent to the legal claims made
on them. Under the present system, employers and employes each pay half the
premiums. An important feature of the scheme is the voluntary insurance of
members of the families of the compulsorily insured and of persons who are entitled
to relief from the insurance fund. The pension allowed is at least £8 lOs. for the
full benefit, and £4 5s. for others ; widows and orphans may claim a pension up to
three-quarters of the amount first named.
3. Particulars of Operations. — In 1901, the number of members of the various
funds or associations amoxmted to 178,492 ; the number of persons voluntarily
insured was 188,113 ; while the number of those entitled to insurance relief was
167,717. At the same date, there existed 178 different sickness funds, or rather
subdivisions of funds in the miners' insurance, which showed an average member-
ship of 1,020 persons, and 235 funds for voluntary insurance, of which latter only
178 showed any active members, the average number of members in these 178
funds being 942.
Section 5. — Recent Developments and Proposed Legislation.
1. General. — After the Acts of 1887 (accident insurance) and 1888 (sickness
insurance) had been brought into force, there still remained for the Government
the important task of preparing for the general evolution of social insurance by
collecting and examining the results of experience prior to taking the initiative for
reform. To this end, the Government instituted two inquiries, partly viva voce
and partly through correspondence, viz., — (a) the " Inquiry on Insurance against
Accidents, 1895," and (6) the " Inquiry on Insurance against Sickness, 1897."
39
Both of these resulted in the submission of a great number of representations
and proposals. Though nobody could fail to appreciate the beneficient efiecta of
insurance for workmen, a number of defects has been found in the existing laws,
and the absence of amending legislation has been felt as a serious impediment to
reform.
2. General Invalidity and Old-age Pensions Proposed. — The completion of
compulsory insurance through an additional Act on insurance against invalidity
and old age is not only desired, as is testified by numerous petitions and resolutions
of the working classes, but it also figures largely in the programmes of the popular
political parties.
The draft of a Bill presented to the Imperial Council by the Government in
1901, and containing regulations regarding the pensions insurance of persons in
private, clerical, or technical employments, as well as of a number of officials in
the pubhc service, may be regarded as a preUminary step towards this completion.
Though this draft has been discussed in Parliament, nothing has, so far, been done
to secure its becoming law.
3. Bill of 1904. — On the 9th December, 1904, a new Bill was brought before
the two Houses, and made public. This Bill is officially Imown as a " Programme
for the reform and extension of Workmen's Insurance," but in reality it is a
completely worked-out scheme designed to take the place of the earher Acts on social
insurance, and to thus inaugurate a new era in the development of the Austrian
workmen's insurance. Since that time, much has been done in the way of working
out the scheme of a new Act on insurance on the basis indicated, but up to the
present it has not passed into the legislative stage.
The BUI of 1904 aimed at the introduction of compulsory insurance against
invalidity and old age, together with a provision for widows and orphans, such
provisions being at present contained only in the Act providing old-age insurance
for miners. The last-named Act, however, lacks a real insurance against accidents,
since compensations for accidents are counted among its provisions.
The BUI on iiisurance against accidents proposed to extend the circle of insured
persons in so far that persons for whom insurance against accidents was made
compulsory had hkewise to insure against sickness, when they did not already
belong to some other sick fund. The programme tries to meet the wishes of those
who desired insurance against sickness and invalidity in other circles of wage-
earners, but fixes a wage-hmit of £100 per annum.
The programme of 1904 brings miners' insurance also under the control of the
State Insiirance Department, really the control of the Minister of the Interior.
A further projected innovation is the reorganization of the legal procedure,
especially of the arbitration courts, and also the establishment of a high court for
workmen's insurance, an institution which, it is thought, should contribute
materially to uniformity in legal procedure and decisions.
In regard to the sickness funds, the programme prescribes a minimum number
of 1,000 members for the district sickness funds, and of 500 members for the other
funds. The working out of this scheme wiU reduce the total number of funds
to one-third of their present number, and wiU lead to the absorption of many of
the existing funds in others.
The sickness funds are to be regarded as independent funds simUar in their
constitution to those of factories, while the funds will be retained only for the
insurance of invalids, widows, and orphans, until the introduction of a special Act
dealing with this class of insurance, whUe the miners wUl, at the same time, be
admitted to insurance against accidents.
40
Certain institiitions abeady exist for voluntary insurance against invalidity
and old age, and they also make provision for widows and dependent relatives in
case of death. The most important of these institutions are organized in connexion
with the State and private railways. Only the higher wage classes, however, are
benefited by these institutions, while the great masses of workmen remain outside
them. Notwithstanding the fact that the programme of the Government of 1904
initially met with great opposition, pubUc opinion changed steadily in its favouj',
as the interested associations and persons were enabled to make an examination
of the regulations, and were thus able to assist in the working out of future legislation.
In 1907, a new Bill on industries and trades of some importance in relation to
workmen's insurance was introduced. It proposed new regulations concerning
insurance against sickness and sickness funds. Another Bill of 16th December,
1906, introduced the question of the compulsory insurance of persons engaged in
clerical or technical private service, and of a number of officials in pubHc service,
extending in this way the scheme of compulsory insurance to a wider circle, viz.,
outside the limits of working men.
CHAPTER IV.— SOCIAL INSURANCE IN HUNGARY.
Section 1. — Introduction.
1. Early Organizations. — Owing chiefly to the fact that serfdom existed in
Hungary until the year 1848, there was no provision in early Hungarian law giving
workmen any claim for assistance in cases of accident or sickness ; the influence of
the old Roman law was also against the making of any such provision. According
to the patriarchal system, however, it was the duty of the master to keep his
Servants. In this regard the condition of the agricultural labourers and servants
did not undergo any change until comparatively recent times, viz., 1848, when
serfdom was abohshed. Though the Act abohshing serfdom changed the conditions
of agricultural labourers and of servants into voluntary mutual relations as regards
work, the patriarchal traditions survived the reform of civil law and of social
economy, and thus many years elapsed before the legislature concerned itself with
the question of assisting agricultural labourers in time of incapacity for work.
In 1875 and 1898, Acts and regulations were passed fixing certain liabilities on
the master with regard to hospital expenses for his servants in domestic or in
agricultural occupations, but these regulations were made rather with a view to
hygienic conditions than to social economy. Under these regulations the master
was liable, if a servant's illness were the consequence of, or occurred through accident
during his work, for all expenses incurred up to six months, and if the result proved
fatal, for funeral expenses and for a lump sum payable to the dependent members
of the family of the deceased.
Provisions for the benefit of workmen engaged in trades were developed in the
old Hungarian legislation on a basis similar to that upon which the rights of agri-
cultural labourers were determined. Regulations and Acts providing assistance
for apprentices in case of sickness were passed in 1840, 1872, 1875, and 1884, and
were based on the principle of the obligation of an employer to assure the economic
Welfare of his workmen.
This obligation at first furnished the basis for insurance against sickness and
invalidity as well as against accident. But pohtical as well as economic considera-
tions showed, in Hungary, as elsewhere, that insurance based on the principle
of responsibihty had not the desired eSect, and that any satisfactory system of
41
insurance must be based on the principle of co-operation. Since tie interested
classes of manufacturers and workmen began to establish insurance funds on the
latter system, Hungarian legislation in respect thereto has developed its insurance
policy on the basis of co-operation.
2. Development of Miners' Funds for Invalidity and Old-age Perisions.—lhe first
institutions on the basis of co-operation, namely, the Miners' Funds, originated
from associations which had been in existence for centuries, and the age and tradi-
tions connected with these insured that legislation in the first instance should
regulate and protect them.
Compulsory insurance of miners against invahdity and old-age has existed since
1854. Under an Act passed in that year, each proprietor of a mine is compelled
to establish a fund for the assistance of his workmen, their widows and orphans,
and every workman must participate in the fund.
In 1891 an amending Act was passed making it obhgatory for the funds to admit
as members not only miners, but also workmen occupied in trades more or less
closely connected with the mining industry. In 1902 the invalid pension granted
was £12 10s. Od., the widows' pension £5 5s. Od., and the orphan pension £1 9s. Od.
Although the Mining Act of 1854 allowed the miners' funds to develop to a certain
extent, existing legislative methods restricted the freedom of their general organiza-
tion, activity, and business. Hence the necessity for amending this Act and the
desire to improve the whole condition of the miners' insurance institutions. The
Minister of Finance of Hungary consequently prepared in 1903 a new Mining Bill,
regulating at the same time the miners' funds. This Bill has, however, not yet
been passed, and invalidity and old-age insurance has not yet been extended to
dersons other than those engaged in mining iadustries.
3. Development of Sickness and Accident Insurance. — Until the middle of the
19th century no institutions existed in Hungary for the purpose of assisting work-
men engaged in trades. Assistance given by the towns was of the character of
public charity, and the alms and homes of the trades guilds concerned themselves
rather with the assistance of the healthy workman, while the sick workman had to
find the necessary help in the house of his master. While the question of charitable
institutions for workmen was before the Hungarian Parhament, the Government,
on the 29th April, 1885, ordered an inquiry into such institutions. The first statis-
tical census, taken in 1885, furnished details of the existing institutions. These
had been estabUshed partly by employers, and partly by associations of workmen
for assuring the latter material help in cases of sickness.
While there was a constant increase in the number of associations and sickness
funds the absence of any legal regulation with regard to the generality and activity
of the associations was increasingly felt. The Industrial Association of Hungary
first took up this question of the legal regulation of insurance, viz., in 1876, by
proposing the estabKshment of compulsory insurance by means of compulsory
municipal funds, side by side with the existing private institutions which it was
desired to retain.
This movement had some results, in so far as an Act was passed in 1884 regulating
the question of workmen's insurance against sickness, but it applied to artisans only,
and was not based on the principle of compulsion. According to this Act the trades
associations were obUged to estabhsh sickness-funds. In consequence of the small
number of funds established by the trade associations, however, they themselves
were obliged to consider the foundation of compulsory funds. The General Assembly
of all trade associations of Hungary in 1879 passed a resolution for the abolition of
the old regulations of the Mining Law, and for the establishment of compulsory
funds in every town or municipahty containing at least 100 artisans.
42
In accordance with the steps taken by industrial circles and following the
example of institutions estabUshed in other countries, the Hungarian Legislature
based its 1891 Act on workmen's insurance against sickness on the compulsory
principle, and by the organization of a system of sickness-funds the social problem
of the assistance of workmen incapable of work has been partially solved. So far
as the financial and hygienic points of view are concerned, the effect of the Act has
been good.
In 1890 a Bill was introduced dealing with insurance against accidents and
invalidity, but was so unfavorably received by the interested classes that it was
not proceeded with, and until 1901 the problem remained in abeyance. In that
year the question was brought forward in the speech from the throne at the opening
of Parliament, and subsequently a project was elaborated, based on the principle
of compulsory insurance against accidents. From 1901 onward repeated demands
have been made for the solution of the problem on the basis mentioned.
The year 1907 marked a new era in the history of Hungarian workmen's in-
surance. In that year an Act was passed dealing both with insurance against
sickness and accidents of persons engaged in industrial and commercial concerns.
It established a new basis for the insurance of the working masses, and much
extended the scope of the Act of 1891.
Section 2. — Insueanoe against Sickness.
1. General. — Compulsory insurance against sickness was introduced by an Act
passed in 1891, which has abeady been referred to, and which extended the com-
pulsory provisions to all employes in trades ; other employes, including those
engaged in agriculture and forestry, and home industries, may be voluntarily
insured so long as their wages are not above the prescribed hmit of £100.
The new Act of 1907. effected great changes in the system of insurance against
sickness, both in regard to right of insurance and in regard to its organization, and
added insurance against accidents to the scheme.
2. Chief Features of System.— The amounts of premiums vary according to the
wages of the workmen, and are paid in equal proportions hj employers and
employes. The benefits afforded are free treatment and sickness payments during
twenty weeks ; the amounts of these payments must not exceed 50 per cent, of the
workman's wages. According to returns for the year 1906, there were 440 funds,
with 850,000 members. The premiums paid amounted to £550,000 (13s. per insured),
and the expenditure to £475,000 (£1 17s. Od. per sick person, or 2s. 2Jd. per day of
sickness).
3. Organization. — The system of insurance against sickness, now fuUy organized
and completed, is different from the system of workmen's insurance in western
European countries, inasmuch as it is a national organization. The 1907 Act,
abohshed the funds of corporations, of building enterprises, and of private societies
organized under the Act of 1891, and instituted a national fund. As intermediary
local agents, this fund has the territorial funds, and for insurance against sickness
has also the factory funds.
The National Fund has civil status, and undertakes the financial and direct
administration of the two branches of insurance. As regards interested employers
and employes, the organization, which includes a general assembly, a board, of
directors, and a board of supervision, is based on the principle of autonomy. The
participation in this autonomy is indirect, inasmuch as the general assembly is
constituted by delegates of the territorial and factory funds. These delegates are
elected in proportion to the number of the insured members of the fund they
represent. The general assembly elects both the board of directors and the board
of supervision. The employers interested and the workmen insured, are equally
43
represented in the administration of the National Fund, and of the intermediate
loca,] fmids ; that is, the administration is based on the proportion of the contri-
butions, half being paid by the employers and half by the workman.
To meet to some extent the constant accumulation of liabilities to pay annuities
a reserve fund has been established.
4. Swpervision by the Government. — The present Act came into force on the
1st July, 1907, on the same day as the " National Royal Hungarian Office of Work-
men's Insurance" entered upon its functions of supervision. The " Workmen's
National Fund for Assistance in Cases of Sickness" and the " Insurance Against
Accidents" were established at the end of 1907, and the organization is at present
at work in all its branches, although certain matters have so far only been pro-
visionally regulated.
The National Royal Department for Workmen's Insurance contains a judicial
section, by whose means it exercises Governmental supervision over work-
men's insurance. An Arbitration Court of final instance is instituted at the seat
of each territorial fund, and its competency embraces the territory to which the
fund belongs. A Judge chosen from among the members of the Court of Justice
of the respective district is president of the Court, two members representing the
employers, and two representing the workmen make up the balance. The four
latter are elected periodically at the general assembly.
The regulation of numerous matters of detail is placed in the hands of the
Minister of Commerce, who has. published a number of explanations concerning
the apphcation of the Act.
Section 3. — Insurance against Accidents.
1. General. — Compulsory insurance against accident was instituted by the same
Act (1907) as that which inaugurated a general system of sickness insurance. Com-
pulsory insurance against accidents, however, exists chiefly in the great industries,
while in the petty industries and in commerce compulsion is limited to dangerous
occupations.
2. Chief Features of System. — In cases of incapacity for work resulting from
accident, the expenses for the first ten weeks are borne hj employers and workmen
in equal parts, while all the other expenses in the insurance against accidents
have to be borne by the employer, whose contributions are fixed each year by
assessment in the same manner as in Austria (see Chapter III., sec. 2., para. 2). The
benefits are generally the same as in Germany (see Chapter II., sec. 3, para. 3),
but accident pay may not exceed 60 per cent, of the wages, and no indemnity is
paid for less than 10 per cent, loss of wages.
3. Organization. — Reference has already been made to the method of organiza-
tion (see sec. 2, para. 3 hereof), which, under the Act of 1907, is uniform for both
branches of insurance. Notwithstanding this uniformity, however, both the
regulations by which the two insurance systems are governed, and their financial
arrangements are difierent. The spheres of insurers embraced by the two branches
are not quite identical, and the expenditure has therefore to be provided for on
difierent principles. This unity of organization for the two branches of insurance
has also been applied to the organization of arbitration and supervision.
Section 4. — Future Developments.
1. General. — By the Act of 1907 the Hungarian Government has placed insurance
against sickness and accidents on a modern basis. This has been attained through
systematic study and practical experience extending over a number of years. On
the introduction of the Act the necessity for reforming and extending sickness
and accident insurance to workmen in the mining industry and in agriculture was
44
not forgotten. The two Houses of Parliament decided, therefore, at the time of
the passing of the Insurance Act, to invite the Ministry of Agriculture and the
Ministry of Finance to prepare in the near future a Bill for the reform of the insurance
for miners and agricultural labourers.
There remains now to be established a general system of insurance agamst
invahdity and old-age, and for widows and orphans. These branches of insurance
would also be assigned to the National Fund of Workmen's Insurance, which by
the Act of 1907 has been organized in such a manner as to be able to undertake
insurance against invahdity in all its possible emergencies.
2. Unity of Organization. — It is recognised that the unity of the organization
of insurance against sickness and accidents is not quite reahzed by the Act of 1907,
inasmuch as the financial systems of the two branches difier. It is, therefore,
still a future task to estabhsh identical principles for the allotment of contributions
towards the expenses of insurance. Although, in its present form, social insurance
in Austria shows great progress in comparison with the past, the whole institution,,
as created by the Act of 1907, is nevertheless only the nucleus round which a com-
plete system of workmen's insurance for all classes of labourers will be built up.
CHAPTER v.— SOCIAL INSURANCE IN ITALY.
Section 1. — Inteoduction.
1. General. — Itahan legislation has taken up and developed in a remarkable
way both insurance against accidents and insurance against invalidity and old
age.
The former is compulsory, but the choice of the insurance institution is left
free to the insurer, while the latter is voluntary. Before compulsory insurance
against accidents was introduced, attempts were made to establish a voluntary
system by means of a National Fund established by the Act of 1883. This Act
approved of an agreement between the Government and several provident and
charitable institutions to contribute to a guaranteed fund for this new institution,
amounting to £60,000. This National Fund was lodged in the Savings Bank at
Milan, and its administration intrusted to a Council composed of members of the
executive committee of the Savings Bank of Milan and of a representative of each
of the institutions which had contributed to the foundation of the fund.
Every employe residing in Italy of the age of ten years was entitled to insure
himself in this fund against all consequences which could be the result of an accident.
2. Failure of Voluntary Accident Insurance Scheme. — The Government made
every efiort to encourage the workmen to become members of the fund, and several
circulars were addressed to the difierent societies of mutual assistance, and also to
the savings banks, inviting them to do everything in their power to induce workmen
to participate in the institution, which ought to result in great benefits for the
working classes. Despite all these efforts, however, on the part of the Government
and private bodies, voluntary insurance against accidents did not have the desired
success. In 1893, ten years after the estabhshment of the National Fund, its
membership amomited only to 118,133, and in 1898, when compulsory insurance
was introduced, the number of insured was only 160,772. It thus became evident,
that voluntary insurance would not lead to any satisfactory result.
45
3. Development of Compulsory Accident Insurance Legislation. — The long period
of legislative preparations which resulted in the Act of 17th March, 1898, providing
for compulsory accident insurance, can be divided into two periods, each charac-
terized by a difierent system.
The first period, extending from 1879 to 1886, was the period of schemes based
upon the system of legal responsibility, and during that time two private Bills
were presented to the Chamber of Deputies, as well as three Ministerial schemes ;
not one of these obtained the Royal sanction. All were based on the principle of
the legal liability of the employer, but it was seen in Italy, as elsewhere, that any
insurance based on that principle would lead to endless disputes and difficulties
between the parties concerned.
The first draft of an Act belonging to the second period, and based on the
principle of compulsion, was submitted to the Chamber of Deputies in February,
1890, under the title " Precautions to Prevent Accidents at Work." It proposed to
compel employers either to insure their workmen in the National Fund or in a
private insurance institution, or to establish a fund for their own workmen. This
was the first scheme which contained the idea of a free choice of an insurance
institution, an idea afterwards well supported and defended.
A second draft, based on the same principles as the preceding one, was presented
to the Senate in April, 1891. The Central Bureau of the Senate, after an elaborate
study of this draft, submitted, however, a counter proposal, the most characteristic
differences between the latter and the one presented by the Government being in
the difierent procedure for framing the regulations for the prevention of accidents,
in the exclusion of the term " grave fault " on the part of the workmen, and in
admitting to insurance' overseers of workmen, who did not earn more than 4s. 6d.
per diem. This proposal, after discussion and approval by the Senate, was
• submitted to the Chamber of Deputies in March, 1892, but was not discussed in
Parliament owing to the Ministerial crisis of May, 1892, when the dissolution of
the Chamber of Deputies occurred.
In December, 1892, the Minister of Commerce submitted a new draft prepared
by the Central Bureau of the Senate, and differing only sUghtly from the above-
mentioned one. This scheme was examined by a Parliamentary Commission,
which, approving its fundamental features, made only some slight modifications,
and submitted its report in March, 1893. Again the Parliamentary session closed
before the Bill had become law.
Two years then passed before a new draft was presented (in June, 1895) by the
Minister of Commerce. This draft contained the essential features of the preceding
Bills, but it also did not reach the stage of parliamentary discussion. The succeeding
Minister of Commerce took up the last Bill in its entirety, and brought it before
the Chamber of Deputies in April, 1896. After long and animated discussion,
especially in regard to the question of the liability of the employers, the Bill of the
Minister was finally approved in the session of 27th May, 1896.
It, however, met unforeseen and serious difficulties in the Senate, which again
commissioned its Central Bureau to inquire into the whole matter. A counter
scheme was submitted in December, 1896, in which some modifications were made,
mainly with regard to the liability of employers. On this, the Minister withdrew
his scheme, and referred it to the Council of Prevoyance before submitting it again
to Parliament.
The Minister of Pubhc Works made several proposals intended to assist the
Government in drafting a new Bill, which, in its principal features, was to be similar
to the draft approved by the Chamber of Deputies in May, 1896. The question of
the hability of the employer was to be solved by a new regulation, which made him
legally liable only in cases where a sentence of a criminal court had declared the
accident to have been caused by the fault of the employer or of his representatives.
46
Inspired by these ideas, the Minister of Commerce submitted a new scheme to
the- Senate, arousing strong public interest even before it came under parhamentary
discussion. The Central Bureau of the Senate accepted this Ministerial scheme,
demanding only a more general regulation of the liability and reverting to the free
choice of an insurance institution such as was contained in the scheme of 1896. The
debate took place in July, 1897, the draft was approved by the Senate on the 5th
July, submitted to the Chamber of Deputies on the 7th, and, so as not to retard
any longer the coming into force of an Act, the passage of which through Parliament
had taken up so much time, the Chamber of Deputies approved of the Bill (already
passed by the Senate), and adopted it on the 17th March, 1898.
After this Act had been in force for five years, the necessity for making some
amendments and additions was felt, as well as of an extension of the insurance
to wider circles. In consequence, an amending Bill was introduced on the 29th
June, 1903, and came into force on the 1st January, 1904.
4. Development of Voluntary Invalidity and Old-age Insurance Legislation. — The
legislative preparations for an Act on insurance against invalidity and old age
began in March, 1881, when the Minister for Agriculture, Industry, and Commerce
introduced a Bill for creating a National Pensions Fund for workmen. The necessary
means were to be furnished by the contributions of the workmen enrolled, and by
sums which the State would grant as a capital fund, and also by yearly compulsory
contributions which existing savings banks were to be required to pay out of their
profits.
The Bill was based on the principle of voluntary insurance, as also were several
subsequent Bills. The above-mentioned Bill did not even come under discussion,
and another Bill containing a great number of amendments was introduced by the
same Minister in 1882, while a third was presented by a new Minister of Agriculture
in 1889 ; none of these Bills, however, came under discussion.
A fourth Bill was submitted to the Chamber of Deputies in 1887, differing from
the others, inasmuch as it proposed the estabhshment of several district funds
instead of a National Fund. This project was debated in Parliament in 1889 and
1890, and the Parliamentary Committee brought in a counter project, retaining,
however, the scheme of district funds.
Still another Bill was introduced in 1893, similar to those preceding, and then
the final Bill was presented by the Minister of Commerce. This was examined by
a Committee of eighteen Deputies, the President of which submitted his report
at once to Parliamentary discussion. This report is said to have been the result
of thorough and enthusiastic study. The ensuing debates retarded the passing
of the Bill till July, 1898, the Act finally becoming law on the 17th of the same
month.
Section 2. — Compulsory Insurance against Accidents.
1. General. — The Act of 1898 came into force on the 1st October of that year ;
it comprises two distinct parts, the first of which contains the necessary regulations
so as to minimize the prevention of accidents, while the second estabhshes the
conditions under which the right of indemnity and the obUgation of insurance
against risks are to be determined.
These two complementary elements are the characteristic features of the
Itahan Act, and, if the provisions be scrupulously observed, the Act will ameliorate
the condition of workmen, without really impeding the development of industry.
Conformable to the necessities of the case, the Act extended compulsory insurance
only to industries exposed to special dangers, or to those in which great numbers
of workmen are occupied, or which make use of machine power. The Act was
amended in 1904.
47
2. Chief Features of System. — The Act permits employers to insure their workmen
in any one of four ways, viz. : — (a) In a commercial insurance company (so long
as the company is authorized by the Government) ; (&) to establish their own
funds ; (c) to associate with others in forming a mutual insurance syndicate ; or
{d) to insure in the National Fund. From this regulation the worlanen engaged
in establishments belonging to the State or to municipalities are excepted, as these
workmen must be insured with the National Fund.
By the amending Act of 1904, the system was extended to a great number of
other trades, comprising workmen engaged in agriculture and forestry, in navigation
and fishing, in the exploitation of corals and sponges, workmen in dockyards, and
in aU estabHshments where motive power is employed. The insurance was further
extended to clerks occupied in estabHshments furnishing the provisions for the
army and navy, so that at the present time the system applies to practically all
employes whose earnings are under the wage hmit (£85 per annum). The whole
of the premiums must be paid by the employers;
The Italian Act on insurance does not make any distinction between Italian
and foreign workmen, differing in this respect from the Acts of several other
countriesL
3. Benefits Afforded. — The original scale of benefits (under the 1898 Act) paid to
the injured workmen or their families in cases of death were regulated by the
following conditions : — •
(a) In cases of permanent and absolute incapacity, a sum equal to five times
the yearly wages, and never less than £120, has to be paid.
(b) In cases of partial permanent incapacity, a sum equal to five times the
amount by which the yearly wages have been reduced must be paid.
(c) In cases of temporary absolute incapacity, a daily allowance must be
paid equal to half of the average wages during the whole time of the
incapacity to work, with the exception of the first five days.
(d) In cases of temporary partial incapacity, a daily allowance must be paid
from the sixth day, equal to the half of the amount by which the
average wages have been reduced in consequence of this incapacity.
(e) In cases of death, a sum equal to five times the yearly wages of the
deceased is to be paid to his heirs within three months of the death.
The employer must also bear the initial expenses for doctor and
medicines.
In order to calculate iademnities in cases of absolute, temporary, or permanent
incapacity, or in cases of death, the yearly wages are assumed to be 300 times the
daily wages, with a maximum of £80. The maximum compensation was, conse-
quently, £400.
The chief modifications made by the amending Act (1904) in the method of
calculating indemnities were the following : — In cases of permanent incapacity, the
compensation was increased from five times to six times the yearly salary, and the
same increase was made for cases of partial incapacity. In cases of temporary
incapacity, the allowance must be paid for the whole duration of the incapacity
up to a maximum of three months, and beginning with the day on which the acci-
dent occurred. The compensation to the next of Idn of a deceased workman must
be divided according to the financial loss which each of the heirs suffered through
the death of their supporter.
4. Mutual Insurance Syndicates. — The Act of 1898 gave the right to the
Government to issue Royal decrees for the establishment of syndicates of mutual
insurance against accidents in industries, where such a system of insurance is
deemed to operate more favorably than the other system provided for in the Act
This innovation was made principally on account of the sulphur mines in Sicily
48
mines in a great part worked by the holders of small leases. The owners of such
mines often lease parts of their mine to different contractors, each with their own
pits and yards. This extensive subdivision of the mines, and the differences in
the leases granted by the owners, naturally placed great difficulties in the way of
an equitable and exact apphcation of insurance principles.
Special benefits are accorded to these syndicates. They are, for example,
exempted from giving security, but, on the other hand, are obliged to gradually
institute reserve funds in conformity with regulations contained in the same decree
which directs their establishment. The Act allows the administration of the
fiyndicate to collect the contributions from the associates in the same manner as
direct taxes are collected. The privileges are accorded on the condition that
the syndicates undertake the payment of compensation in cases where the employer,
who had originally insured his workman, becomes insolvent.
A Royal Decree of the 11th July, 1904, constituted a compulsory syndicate for
mutual iasurance against accidents among the owners of sulphur mines in Sicily,
numbering at that time about 900, and employing about 40,000 workmen.
Under the general system the amounts of the premiums depend upon the
wages paid, but by the decree referred to the premiums collected by the
syndicate were fixed according to the quantity of sulphur produced. The
amoimt to be paid was Is. 3d. for each metrical ton of sulphur or of ores
containing more than 65 per cent, of pure sulphur, and 5d. for each ton of ores
containing less than 65 per cent, of pure sulphur.
The syndicate is authorized to collect the premiums from owners, notwith-
standing that the exploitation of the mines has been delegated to other persons.
The Act of 1904 further sanctioned a reduction of the security which had to be
given on the establishment of private funds. This reduction so facilitated their
establishment that in 1904 eight other funds were instituted. At the end of that
year, the eight syndicates comprised 4,828 employers and 216,000 insured workmen.
5. Premiums and Compensation Paid.^— It is claimed that mutual insurance
as practised in the above-mentioned syndicates, ofiers the advantage of great
economy in expense to the employers, and yet affords the advantage of greater
protection to the individual workman, as the members will make use of all possible
means for the prevention of accident, thus lessening its frequency.
It is stated that experience has shown that this system has economical and
social advantages. In fact, while the members of syndicates and funds are called
upon to pay (in advance) contributions, certainly lower than the premiums
collected by private insurance associations, the statistics of accidents for the years
1900, 1901, and 1902 show that for every £100 of contributions or premiums collected
by funds or syndicates, there were distributed in compensations £70 10s., and
that there was thus a saving of £29 10s. This balance, however, goes partly towards
the establishment of a reserve fund, and is partly distributed amongst the members
according to their contributions.
As regards the operations of the National Fund, statistics show that for every
£100 paid by way of premiums, the amount paid for benefits was, on the average,
£98 3s. 8d. for the three years, 1900 to 1902. During the same period, for every
£100 collected by private insurance companies, £78 ISs. 8d. was paid out for benefits.
It may be seen, therefore, that the premiums collected by the National Fund barely
sufficed to pay the benefits, while the premiums paid to private companies were
on the average, £21 4s. 4d. per cent, in excess of the amount required for benefits
whereas the sjmdicates showed a corresponding excess of £29 10s. It would appear
therefore, that primA facie, the syndicates possess advantages over the other
insurance institutions ; it is obvions, however, that the scale of benefits afforded
and the degree of trade risks must be taken into consideration.
49
Section 3. — Voluntary Insurance against Invalidity and Old Age.
1. General. — The Act of 1898 (see sec. 1, para. 4 above) brought about the
^stabhshmeiit of a National Pension Fund against InvaUdity and Old Age, based on
the principle of voluntary insurance. As a first endowment, the sum of £400,000
was assigned to the fund, one -half of the sum consisting in bank notes already set
apart for the purpose, and the other half in part of the accumulated profits in the
postal savings banks.
All Italian workers of both sexes who earn daUy wages are admitted to this
fund. Married women may enter the fund without the authority of their husbands,
and so may children under age without the authority of their parents. Wives and
daughters of workmen, engaged in domestic work only, are also admitted to the
fund. Each workman desiring to enter must sign a request to that efiect, and
present it to the Central Office, or to a branch or auxiliary office, or to a post office.
This request must be accompanied by a certificate of birth, a certificate of citizen-
ship, and a certificate stating the occupation in which the claimant is engaged.
Societies of mutual assistance may pay the contributions they receive from
their members to the National Fund in order to secure a life annuity to their
members. These societies can also make special agreements with the National
Fund for the payment of pensions and for the insurance, of their aged members.
A Royal Decree also authorized the National Fund to efiect insurance for life-
annuities for the middle classes.
2. Organization. — The National Fund, though estabUshed by the State, is quite
independent in its administration, the responsibiUty of the State being limited to
the assistance given in the formation of the fund, and in making up its yearly
income. The State's supervision is exercised by three delegates representing in
the Administrative Council the Agricultural, the Treasury, and the Post and
Telegraph Departments respectively. The other members of the Council are
appointed by a Royal Decree on nomination by the Minister of Agriculture.
The National Fund has its head-quarters in Rome, but exercises its functions
in the difierent parts of the country by means of post offices, branches, and auxihary
offices. Branch offices may be estabhshed with the savings banks, or public
charitable institutions, or with popular banks. Auxiliary offices may be established
in any place where there is a sufficient number of insured persons.
3. Contributions. — The maximum of yearly contributions of a workman cannot
be more than £4 ; the minimum of partial contributions is fixed at 5d. weekly.
These contributions may be discontinued or kept going, according to the will of
the insured, and can be made at all post offices, branch, or auxiliary offices.
In order to induce a great number of workmen to benefit by this National Fund,
the Council has estabhshed the practice of deducting at the end of each year a
certain amount from the income of the fund, and to distribute this amount amongst
the insured according to the amount of their contributions, but this bonus is not
paid to persons entitled to a pension annuity.
Italian workmen, who hve in foreign coimtries, can only be members by paying
their contributions to Italian Consuls or to specially authorized institutions. To
facihtate the participation of aged workmen, the Act allows them during a period
of transition, to purchase membership by the payment of contributions in arrears
to a maximum of fifteen years, the contributions not being less than five shillings
per year.
50
4. Benefits Afforded. — The liquidation of the individual account of the insurer
takes place after he has paid contributions during 25 years, if he has then attained
the age of 60 years.
The liquidation consists in the conversion of the accumulated capital into a
life-annuity for the insurer. The tables according to which this conversion is
effected are prescribed by a Eoyal Decree.
The amount of these life-annuities can be increased by the operation of a special
fund which was at first established out of a part of the yearly income of the National
Fimd, set apart each year by the Council, by the contributions paid by the insti-
tutions destined to help the iavaMs, and by donations and legacies. Thus the King
of Italy paid a sum of £40,000 to the National Fund on the occasion of the birth
of the Grown Prince, and this smn has been used for the above-mentioned purpose.
The State adds by way of subsidy at least ten shiUings per annum per head to the
pension.
Pensions are also paid to persons incapacitated for work, if they have contributed
for not less than five years. In case of death before a pension falls due, all premiums
are repaid.
5. Amending Act of 1901. — By a new Act passed in 1901, means were indicated
by which the capital of the National Fund could be increased. Several new amend-
ments have since been proposed b}' the Government, resulting in a new Act, passed
on the 30th December, 1906. This Act came into force on the 30th May, 1907.
Several new regulations have led to a better supervision of the insured, and to a
better understanding by them as to what is the amount of their claims at any given
moment.
Another important regulation fixed a minimum of £5 for pensions payable
in cases of invalidity of young persons. The Invalidity Fund of the National
Fund amounted in 1901 to £96,000 only, while calculations made on the basis of
" Behm's Invalidity Tables " showed that in order to pay all the pensions for which
it is liable a capital of £560,000 would be required.
6. Amending Act of 1906. — In order to secure a proper foundation, the Act of
1906 authorized a new donation of £400,000 to the National Fund. This Act also
increased the ordinary income of the National Fund by a sum of £28,000, and,
further, more clearly defined the class of persons entitled to the benefits of insurance,
by drawing the line at persons who have to pay to the State taxes of any kind
exceeding in the aggregate £1 4s.
While the old Act fixed the moment of the liquidation of the pension at the
insurer's age of 60, and made an exception only in the case of women who could
demand it at the age of 55, the new Act allows such exception to be made
only in the case of workmen engaged in particularly unhealthy occupations, which
may result in conditions of senility or invahdity at comparatively early ages.
The Act also gives still greater facihty to aged men to participate in the insurance
by allowing them liquidation of their claims after they have paid contributions for
ten years if they have, in addition, paid every year (besides their regular contri-
bution) an amount calculated according to the number of years by which the normal
terra of contributions has been abbreviated.
The Act also institutes premiums of encouragement and special subventions in
favour of societies or other institutions making propaganda for participation in
the National Fund.
The Act further authorizes the National Fund to invest money in the construction.
of cheap houses for workmen.
51
7. Particulars of Operations. — The following tables will give an idea of the
progress which the National Fund has accomplished : —
Italy. — Number of Members of National Fund, 1899 to 1907.
Year
1899.
1901.
1903.
1905.
1907.
Number of Members . .
Amount of Fund
776
£493,153
31,378
£701,247
114,239
£1,129,253
169,196
£1,719,213
255,127
£2,480,000
Section 4. — Sickness Insurance and Future Developments.
1. General. — No Act on workmen's insurance against sickness has been intro-
duced up to the present, but the hope has been expressed that it will not be long
before this branch of insurance is also taken up by Parhament. All the necessary
Btatistioal and technical .studies and preparations in connexion therewith have
already been made. The Census taken in 1905 of the existing sickness funds shows
that there are a great number of institutions which might play an important part
in the future of compulsory insurance against sickness.
In 1886, an Act was passed providing for the regulation of existing voluntary
sickness funds.
2. Voluntary Sickness Funds. — The foUowing table gives particulars of voluntary
sickness funds from 1885 to 1904. These particulars were specially collected with
a view to the establishment of a national system of sickness insurance : —
Italy. — Number of Voluntary Sickness Funds, 1885 to 1904.
Tear.
Numter of
Societies.
Number of
Members.
Average per
Society.
1885
1895
1905
4,896
6,722
6,535
750,085
956,323
953,455
153-2
142-3
145-9
The financial position of those societies so far as particulars are available was,
at the end of 1904, as follows : —
Italy. — Financial Position of Voluntary Sickness Fund, 1905.
Total Income,
Average per
Society.
Total Expenses.
Average per
Society.
Capital.
Average per
Society.
£
581,297
93-70
£
471,601
7611
£
935,822
480-71
3. Future Develofments. — An Act passed m 1902, contaimng regulations respect-
ing the work of women and children, resulted in a project for the establishment of
a maternity fund, since it was felt that some compensation should be made to
women at such times of enforced unemployment. The project could not be based
on any foreign experience or statistics, since no similar insurance existed elsewhere.
It is, however, understood that this insurance must be compulsory, and embrace
all working women and girls from fifteen to 50 years of age ; for, if insurance were
voluntary, it is evident that only those women who were in need of assistance
52
would become members. It is proposed to fix the daily allowance to women in-
cbildbed at three -fourths of their daily wages. The contributions would also be
in proportion to the wages, and would be paid in equal parts by the working women
and their employers. A statistical inquiry undertaken by the Labour Bureau
gave the requisite data on which the cost of this new branch of social insurance
could be calculated. This showed that the number of working women amounted
in 1903 to 153,695, amongst whom the number of child births for the same period
was 6,893, or a proportion of 45 per 1,000. The wages paid to these during 1903
amounted to £1,952,000.
The inquiry showed further that the birth rate is much smaller among the
working women than among women who are occupied in domestic duties, since
among the working women the birth rate was 45 per 1,000, while among the other
class the birth rate was 120 per 1,000 women. This, however, is largely explained
by the fact that employers engage preferably young girls, and married women
often leave work for good when they become mothers.
The hope has been expressed that the functions of this branch of insurance will
realize one day the ideal of social protection, which it is held in Italy should be
given to mothers and babies with regard to hygienic, economic, and moral conditions.
CHAPTEE VI.— SOCIAL INSURANCE IN FINLAND.
Section 1. — Inteoduction.
1. General. — In Finland, accident insurance is compulsory ; sickness insurance
is voluntary, but is regulated by orders in council ; while the present organization
of insurance against invalidity and old age is also voluntary, though a project is
on foot to make this branch of insurance compulsory. Social insurance in Finland,
both generally, and more especially in regard to its method of organization, appears
to have been considerably influenced by German traditions.
2. Development of Legislation. — In 1888, the Finnish Diet was solicited to
appoint a Commission to examine the question " If, and on what principles, a work-
men's insurance could be introduced in Finland," and in October of the following
year such a Commission was elected. Great diversity of opinion as to whether the
insurance should be voluntary or compulsory existed both in the public view and
also in that of the Commission, the majority of the latter, however, desiring to base
the whole system on the voluntary principle. The minority of the Commission
H^ere, however, very decided that compulsion was essential, at least in insurance
against sickness and against accidents.
With regard to insurance against old age, the Commission was unanimous
that this should remain a private institution, but also that the existing private
institutions should be re-organized.
Three years passed before the Commission finished its work and had placed
before the Government its different opinions and its recommendations. It remained
for the Government to decide its stand-point, but before coming to any decision,
it obtained the opinion of different administrations and employers and worlonen's
associations on the Commission's recommendation. A majority of employers were
against compulsory insurance, while workmen's unions advocated compulsion,,
especially with regard to insurance against accidents.
53
The Government finally decided on taking the middle course, by adopting-
insurance against sickness and old age on the existing basis of voluntary factorjr
and workmen's funds, promising that these should be re-organized on practical
insurance principles and subjected to supervision by the State. For insurance
against accident, it resolved to introduce the system of compulsion.
An Imperial Bill was, therefore, drafted on the principles indicated and placed
before the Diet in 1894, whereat was strenuously discussed, the old reasons for and
against the scheme being put forward with some heat. After protracted debate,
compulsion was adopted only in case of insurance against accidents, but important
alterations were made in the draft Bill.
The Act was passed by the Diet, received the Imperial assent on the 5th
December, 1895, and came into force on the 1st January, 1898. The Government
anticipated the Act by the issue, in 1897, of regulations on the organization
of insurance and by a regulation on the granting of annuities.
Section 2. — Compulsory Insurance against Accidents.
1. General. — Compulsory insurance against accidents embraced, at first (under
the Act of 1895), workmen in trades with less than £30 annual wages, but received
an important extension in 1902, when an amending Act was passed under which the
compulsory system was made to apply to seamen.
2. Chief Features of System. — An employer must indemnify any workman who
has been the victim of an accident, occurring during his working hours, but, on the
other hand, the employer need insure the workmen only against accidents which
prove fatal or cause permanent incapacity. Such insurance can be efiected in any
of the insurance institutes approved by the Government.
In exceptional cases the Act allows well-established industrial concerns, which
are able to furnish the necessary guarantees, to undertake the insurance on their
own part. But few estabHshments, however, have done so. The expenses of in-
surance fall entirely on the employer.
3. Benefits Afforded and Compensation Paid,. — The benefits paid may be sum-
marized as foUow : — (a) In cases of temporary incapacity, the compensation
from the seventh day amounts to 60 per cent, of the daily wages, but it is strictly
limited to 2s. a day. (5) In cases of total incapacity, the yearly pension amounts
to 60 per cent, of the wages ; in case of death the widow receives 20 per cent, of
the wages, each child under fifteen receives 10 per cent, (or if both parents are dead
20 per cent.), but the total sum may not be more than 40 per cent, of the yearly
wages of the deceased. The yearly wages are taken at a maximum value of
£28 163. Od., and at a minimum of £12. The pension for an invalid ranges from
£7 4s. Od. to £17 5s. 7d., while for a widow it consists of £5 15s. 2d. at the most,
and for a child of £2 17s. 7d.
The total compensation paid to victims of accident and their families for 1906
was £18,457. This was distributed in the following manner : —
Finland. — Disteibution oe Compensation foe Accidents, 1906.
CompBusations for
temporftry Invalidity.
Single Payments in
277 Cases.
Pensions to
2,187 Persons.
£
8,665
£
1,528
£
8,264
In the first of these sums is included £4,820 paid by the employers.
54
The pensions for invalidity were —
Finland.^ — Distribution of Pensions toe Invalidity, 1906.
Particulars.
Number.
Amount.
Average.
Pensions paid to invalids . .
Pensions paid to widows
Pensions paid to children under fifteen
years . .
1,692
189
306
£
6,407
1,042
772
£ s. d.
3 15 9
5 10 3
2 10 8
4. Scope of Operations. — In 1906 insurance against accidents was in the hands
of 6 mutual and 5 proprietary societies, of which latter 2 were Finnish, 2 Russian,
and 1 Swiss. The State has not yet established a public fund for insurance.
The compulsory system of insurance against accidents in 1906 embraced 84,000
workmen, including seamen. The expenses of the insurance amounted to a total
of £37,250, or 8s. lOd. per insured person. Amongst this number four establish-
ments with 4,000 workmen had their own insurance funds, and paid compensations
to the amount of £2,548, while the remaining 80,000 workmen employed in 277
estabUshments were insured with various societies ; their wages amounted to a total
of £2,796,000.
5. Proposed Modifications of System. — The results of compulsory insurance
against accidents are said to reveal the fact that it is a desirable system and affords
protection to workmen and seamen against the economic consequences of accidents,
. without imposing charges too heavy upon the employers.
While State inspectors have rarely had occasion to remark on the manner in
which employers and insurance institutions accomphsh their tasks, the actual state
of the organization has given cause for various comments. It is said, with reason,
that in fixing the maximum salary for purposes of compensation at £28 16s. Od.,
injustice was done to the more skilled and better-paid workmen, and also that the
system should be extended to other occupations, especially to agriculture, the prin-
cipal industry in Finland.
In view of an amendment of the Act of 1895, the Government nominated a
Commission in 1906 which presented its report in 1907, recommending a great num-
ber of modifications of the existing Act, of which the following are the most im-
portant, viz., that the wage-limit for compulsory insurance should be raised from
£30 to £36 ; that the maximum amount of pension payable to dependents should
be raised from 40 per cent, of the yearly wages of the deceased to 60 per cent. ;
and that children should have a right to a pension up to the age of 16.
The Commission further recommended that the assistance in cases of temporary
incapacity to work should consist of two-thirds of the daily wages of the insured,
and that if these wages are under Is. 5d., the assistance should amount to 90 per
cent, of the wages, excluding medical treatment and medicines (which are furnished
gratuitously) ; that in cases of incapacity extending over a period of more than
ten days, there should not be counted any probationary period. It has been
calculated that these modifications would augment the insurance expenses by 30
to 35 per cent.
It was also recommended that the obligation to pay indemnities and to insure
their workmen should be extended to employers engaged in agriculture and similar
occupations, in so far as they employ machinery utilizing " natural sources of
energy," and to persons engaged in lumbering.
6d
Although, a lair amount of uniformity in the manner in which the different
organs of insurance have fixed the degrees of invaUdity and the amount of compen-
sation has been attained, the Commission thought it desirable that a common
superior authority should be established to obtain a stiU greater measure of uniformity
and justice.
The Commission proposes, therefore, the creation of a " Labour Council " for
the whole country, the functions of which would be to fix the degrees of invaUdity,
the amount of compensation, and to regulate other economical questions occurring
in connexion with the fixing of compensation.
Legal questions, such as those which arise in fixing the causes of accidents,
would remain under the jurisdiction of the law courts.
The BiU as drafted by the Commission has not, so far as is known, been submitted
to Parliament.
Section 3. — Voluntaky Insurance against Sickness.
L General. — Insurance against sickness is still ui the hands of private charity
funds, instituted either by factories or by trades, and is open to all workmen.
In 1897, the Government published regulations on the sickness and pension
funds of workmen and placed these funds under the supervision of the State,
a supervision, however, which has proved, up to the present time, to be of a
merely superficial character.
2. Scope of System. — According to recent statistics the number of sickness
funds was 179 at the end of 1906, the members amounting to 42,910. Of these
funds 171, with 40,943 members, gave assistance also in cases of burials, but besides
these there were also 89 regular burial funds with 12,956 members.
The funds were divided as follows, according to their organization : —
Finland. — Voluntary Sickness Insurance — Number of Funds and Members, 1906.
Sickness Funds.
Sickness and Funeral Funds.
Number.
Members.
Number.
Members.
Factory-funds
Trades-funds . .
General-funds
6
2
1,791
176
115
34
22
34,210
2,328
4,405
Total
8
1,967
171
40,943
The membership amounts to only 37" 8 per cent, of the total number of industrial
labourers in 1906, and represents a stiU smaller proportion of the whole working
class. Membership of these funds is very unequally distributed with regard to
trades, for, while the number insured in the textile industries amounted to as high
as 70 per cent., there are others in. which insurance is practically ignored. Most of
the funds are compulsory for the workmen of the factories for which they are
estabhshed.
3. Particulars of Financial Operations. — Contributions of members of these
sickness and burial funds amounted in 1906 to £18,345, and expenses to £19,027..
The latter amount includes assistance, doctor's fees, medicines, &c.
56
The number of cases of sickness per 1,000 insured, the average days of sickness
per case, and the cost were as follow : —
Finland. — Voluntary Sickness Insurance — Particulars of Sickness Frequency,
1902 TO 1906.
Days of
Cost per Case of
Cost per Day of
Year.
C&ses
Sickness.
Sickness.
Sickness.
£ s. d.
s. d.
1902..
205
23'0
1 14 2
1 6
1903..
263
180
1 9 3
1 7
1904. .
249
18-2
1 11 9
1 9
1905..
239
20-2
1 13 6
1 8
1906..
283
18-4
1 10
1 5
The above figures are, however, said to be based on a statistic which has not
attained a high degree of precision, and connot, therefore, be taken as more than
approximate.
4. Compulsory System Profosed. — It is said that a system of insurance based on
these fmids evidently has not sufficient vigour to develop. The number of the
funds, however, has greatly increased since 1889, the year when statistics were
first available, and when there were only 74 funds with 14,978 members. But when
the great and rapid development of industry in Finland during the last few decades
is taken into account, insurance against sickness is seen to be in a state of stagnation.
These facts have practically annihilated the opinion that it will be found possible
to satisfactorily institute workmen's sickness insurance by free associations. On
the other hand, as the organization and the control of the existing funds have
proved unsatisfactory, hence the Government, when it created a commission in
1906 for the purpose of revising the general labour legislation, ordered it at the same
time to prepare a scheme for the regulation of sickness insurance. This Commission
has pronounced in favour of compulsory insurance.
Section 4. — Voluntary Invalidity and Old-age Insurance.
1. General. — The present organization for insurance against invalidity and
old age in Finland is regarded as quite insufficient, being in the hands of a certain
number of pension funds with a comparatively small number of members, and
showing many practical defects.
These facts caused those interested to urge that the Government should introduce
a Bill for insurance against invahdity and old age. A petition was sent to the Czar
and the Grand Duke of Finland in 1900, asking that the Government should
make inquiry as to organization for insurance for workmen and persons in
similar conditions against temporary or permanent incapacity for work resulting
either through old age, accident, or other cause, and to place the draft of a Bill
before the Diet, if the inquiry led to practical results. In response to this petition
the Senate elected a Commission in 1904 to consider the question, and eventually to
prepare a draft Bill. In the years following, active consideration was given to the
mode of initiating and developing methods and completing the scheme of insurance.
The political disorders and the general condition as regards social reforms, which
have characterized the political life of Finland since November, 1905, have left
their mark in the domain o? social insurance, however. The report of this Com-
mission is referred to hereinafter {see para. 3 hereof).
57
2. Soope of Voluntary System. — At the end of 1906 there were 43 pension funds,
with a total membership of 12,533, constituted as follows : —
RnlAWD. — VOLtWTAEY INVALID AND OlD-AOE INSURANCE — NtTMBERS 01' FtTNDS AND
Members, 1906.
Funds.
Number ol Funds.
Number of Members.
Factory funds
Trades funds
General funds
21
20
2
9,943
1,201
1,389
Total
43
12,533
During 1906, these funds paid their members pensions to the amount of £2,129,
509 pensions, amounting to £1,826, were paid to widows, and 267 pensions, amounting
to £598, were paid to children.
The number of members of these funds has increased to some extent, while their
functions have been extended, and they have been brought under some degree of
control.
In 1889 the funds had 7,510 members, and paid 189 pensions amounting to £736.
It is evident, however, that the pension funds do not possess the stabihty necessary
to allow of their development into a system of insurance against invahdity and
old age, which would embrace any considerable part of the worldng classes. Con-
sequently, ever since 1890 the demand has been made that a general and com-
pulsory insurance against invalidity and old age should be introduced, embracing
the whole of the working classes in Finland. These demands have more and more
gained the favour of public opinion.
3. Comfulsory System Profosed. — The Commission appointed in 1904 {nee
para. 1 hereof) to inquire into the general question of social insurance, finished its
task in 1909 and submitted its report to the Government. This report contains
drafts of several Bills. It unanimously proposed to introduce compulsory and com-
prehensive insurance against invalidity and old age, at the same time allowing
voluntary insurance to continue. This compulsory insurance would embrace all
wage-earning persons of more than fifteen years of age excepting invalids ; persons
who are not yet insured up to the age of 55 years ; and officials in State or municipal
service, or in public or private institutions, whose yearly salary is not more than
£100.
Persons who are only temporarily employed (less than 60 days per annum),
if their yearly income is more than £100 are to be excepted. On special demand
exemption is also to be granted to persons only temporarily engaged and whose
income does not amount to the above-mentioned sum, and to members of families
who work at home without receiving a real salary.
Persons under 35 years of age whose yearly income is not more than £10Q can
become voluntary members of the insurance, and once a contributor to the insurance,
he may so remain even though his income be increased above the Umit specified.
The insurance premiums would be paid according to the weekly salary of the
insurer. For this purpose the insured persons are divided into six classes, the limits
of which are weekly wages of under 4s., 4s. to 6s., 6s. to 9s., 9s. to 13s. 6d., 13s. 6d.
to 20s., and over 20s. The weeklv payments are fixed for a period of ten years,
and would be 1.34d., 2. lid., 2.88d., 4.22d., 5.76d., and 7.68d. for each class
respectively.
For persons insured under compulsion, the premium is to be paid half by the
insured and half by the employer, while under the system of voluntary insurance
the insured pays, of course, the whole of his premium.
58
It has been estimated that under the proposed system about 80 per cant, of the
men and 40 per cent, of the women would enter the insurance, so that according
to the present number of the population almost 1,000,000 members would be
obtained.
4. Future Developments. — This scheme, which is now being examined by the
Government, will probably be placed before the National Assembly at an early
date.
Social insurance in Finland is held not to have yet reached a high state of
development, since what is regarded as an essential part of it is still based on the
insufficient principle of private funds. But the conviction that it is necessary
to accompUsh a far-reaching reform has established itself. Once the principle is
generally acknowledged that social insurance is a social duty, the passing of the
proposed Bill will be only a matter of time, and its adoption wiU, it is believed,
doubtless result in great advantages to the social peace and to the economic develop-
ment of the population of Finland.
CHAPTER VII.— SOCIAL INSUEANCB IN HOLLAND.
Section 1. — Introduction.
1. General.— In Holland, accident insurance is compulsory, sickness insurance
is voluntary and organized in free associations ; but there is no general system of
insurance against invalidity and old age. Insurance against accidents is governed
by an Act passed in 1901, which came into force on the 1st February, 1903 ; this
Act is, up to the present, the only one which has been passed by the Dutch legisla-
ture dealing with the subject of social insurance.
Although it was recognised that voluntary insurance against sickness, in existence
for many years in the shape of factory and charitable funds, was very insufficient,
the general opinion prevailed that legislation should first provide protection for
workmen exposed to the danger of accidents, who up to that date had a legal claim
for compensation only when they could prove that the accident had occurred through
the fault of an employer or a manager.
At the same time it was recognised that existing assistance, in cases of sickness,
was quite inadequate to provide for the victims of accidents. This fact led the
Government to omit the " waiting time " of four weeks, which initially had been
inserted in the BUI, in order to grant compensation from the day on which the
accident occurred, if the injured workman should be unable to resume his ordinary
work on the third day after the occurrence of the accident.
2. Bill on Compulsory Sickness Insurance. — Practical experience has shown that
compulsory insurance against accidents and private insurance against sickness
do not work well together, and are often a temptation to simulation and deceit,
so much so that in some cases sickness-money and compensation for accidents
were both paid, as weU as double medical fees.
This led to the general opinion that the next step in social insurance should be
the introduction of an Act on insurance against sickness. A Bill on this branch
of insurance, together with a Bill containing a partial modification of the Act on
insurance against accidents was submitted to the second Chamber in its session in
1904-5. This Bill has not yet been passed.
59
Section 2. — Compulsory Insurance against Accidents.
1. General— Accident insurance is compulsory (under the Act of 1901) for
workmen and foremen in manufacturing industries if their wages do not exceed
6s. lO^d. per diem.
A peculiarity of the Dutch Act is that the paying in of the premiums is left
entirely to the initiative of the employers. An employer who has insured his
workmen with the bank has, every half year, to send in a statement of the wages
paid, together with the calculation of the amount of premiums for which he is
liable for the period.
It was found that a great number of employers did not send in their lists of wages
at the proper time, and that many of the returns were quite incorrect. The Act
prescribes that in such cases compulsion should be exercised, but the administration,
thinking that too much compulsion would render the Act unpopular, decided
to apply compulsion only where inquiry had shown that the mistake in the lists and
calculations were caused by reasons other than mere ignorance or carelessness.
2. Organization. — For the purposes of organization a State Bank has been
established. The central administration is in Amsterdam, and inquires into all
the cases of accidents, even into the most unimportant, and must decide on grants,
refusals, changes, and cessation of compensations. These inquiries must be made
by commissioners of the Bank on the spot where accidents occurred.
The number of such commissioners was at first fixed at nine, but had to be
increased to 70 in the two first years. The Act regulates the medical treatment in
such a manner that every doctor may inscribe his name in the register, and thus
acquire the right to treat injured workmen at the expense of the bank and at a
tariff fixed by the management. The greater number of medical men have inscribed
their names in the register, and this arrangement has in many cases resulted in a
considerable addition to their yearly incomes. The number of accounts reaching
the bank in 1903 from doctors and chemists amounted to 35,900, arid in 1904 to
51,000.
The inscribed doctors are under the control of the so-called " controlling doctors,"
the number of which is fixed at nine. It is evident that this number is insufficient
for the exercise of a thorough daily supervision of about 50,000 accidents occurring
every year. An over-strict control would, however, cause justifiable annoyance
to every conscientious practitioner, for which reason an extension of the control
was abandoned. On the other hand, it is said that less scrupulous practitioners are
able to make undue profit from such cases by improperly charging the bank for too
lengthy treatment of their patients.
The system under which all cases of accidents resulting in incapacity for work
for more than three days are dealt with by a central authority proves to be expensive,
since it requires a large staff for management. The Act requires weekly payment of
all compensations and provides that a copy of every decision on compensations
shall be sent to the injured, the employer, and the municipal authorities of the
places where the injured lives, where the employer lives, and where the accident
happened.
On the 1st February, 1903, a staff of 124 officials and clerks was in the service
of the bank ; by the 1st January, 1904, this number had increased to 248, and in
the following year to 506. The expenses for administration amounted to £35,583
in 1903, and to £55,250 in 1904. .
The bank is not obhged, however, to bear the whole of the costs, as the Act
prescribes that the State shall pay half of the salaries of the officials. This con-
tribution amounted in 1903 to £12,000, and in 1904 to £14,333.
60
Notwithstanding these contributions, the cost of administration proves a heavy
burden on the bank, although the greatest economy is exercised, an economy shown
in the small salaries and the poor housing of some of the officials resident in houses
belonging to the bank.
3. Benefits afforded. — The benefits afiorded are — (a) in case of disabihty, free
treatment and daily payments up to 70 per cent, of wages ; (6) permanent inca-
pacity, pension from the seventh week up to 70 per cent, of wages ; and (c) in
case of death, pension up to 60 per cent, of wages and a death benefit af 30 times
the daily wages payable to dependents of the deceased.
4. Scope of Operations and Compensation Granted. — At the end of 1903, i.e.,
eleven months after the introduction of the Act, the number of insured workmen
was about 600,000, and up to that date 38,194 accidents had been declared, while
the following year brought 49,542 cases.
Compensation was refused in only 6 per cent, of these cases, on the ground that
they were not real accidents according to the meaning of the Act. Of the number
of injured workmen for the year 1903, 6,276 could resume their regular work after
three days, so that they only received medical treatment. 25,515 of the injured
liad recovered before the 43rd day, and had thus the benefit of medical treatment
and of temporary payments, amounting to 70 per cent, of their daily wages, this
being paid dtiring the time the insured was incapable of working.
Only 2,210 persons were entitled to a provisional annuity, and 219 received
definite annuities on account of the permanent incapacity for work caused
by accident ; 243 workmen died in consequence of accidents. For 1904 the
numbers were as follows : — 7,235 injured were able to resume work on the third
day ; 34,167 recovered before the 43rd day ; 3,513 received a provisional annuity ;
'631 received a definite annuity ; and 168 died in consequence of the accident.
Some of these numbers have no definite significance, as, on the one hand, some
provisional annuities will become definite annuities if the condition of the injured
cannot be expected to improve in a year, and, on the other hand, some of the injured
receiving a definite annuity may recover.
But this statistical information shows at least that the number of slight accidents
is very great, while, on the other hand, the number of accidents resulting in per-
manent incapacity is relatively small. This occasions heavy administrative and
medical expenses for the Insurance Bank.
The following table gives particulars of compensation, &c., granted in 1903 and
1904 :—
HOLLAND.-
-compttlsoby aocedent lusubance — annuities, compbnsatson, etc.,
Granted in 1903 and 1904.
Year.
Annuities
to
Invalids.
Annuities to
Families
of Deceased
Workmen.
Temporary
Payments,
i.e., tor the first
Six Weeks.
Costs for Medical
Treatment.
1903..
1904..
£
9,417
31,417
£
1,750
0,000
£
40,417
58,500
£
23,083
41,167
5. Self Insurance and Transfer of Risks. — A difference between the Dutch Act
on insurance and the Acts of most other countries lies in the fact that it permits
employers the right of self insurance or of transfer of their risks to a joint-stock
company. The employer or the company undertaking the risk receives the necessary
Koyal permission after the payment of a security, the amount of which is fixed
according to the magnitude of the obligation undertaken.
61
The bearer of the risk is freed from all trouble wMch arises from paying com-
pensations or from providing medical treatment for the injured, as the obligation
to look after all these things stiU Ues with the bank.
The bearer of the risk is responsible only for the repayment to the bank of all
compensations paid and for payment of a capital sum sufficient for the payment
of any annuities fixed by the Bank.
The employer undertaking the risk himself pays the capital iato a sinking fund
ifonds perdu), so that he is not liable for further payments. On the other hand,
he cannot demand a refund if the injured should die or recover, as the company
nndertaldng the risk is hable for further payments and takes the capital as a security
for the obligations undertaken. The bearers of the risk have also to contribute
to the costs of management of the bank.
But few employers have undertaken the insurance directly as the necessary
security can be given only by large capitalists. Beside the State, some districts
and some municipalities with more than 20,000 inhabitants, one of the two large
joint-stock companies managing the State railways, a large cocoa factory, and a
large paper mill have undertaken their own insurance.
The number of those who, on the other hand, have transferred their risks is very
large. This transfer of risk is either made to one of the four insurance banks,
which have established this new branch of insurance, or to one of the four joint-
stock companies formed for the purpose in accordance with the provisions of the
new insurance Act.
The total number of enterprises which have taken advantage of these private
companies is about 35,000, while about 40,000 have insured with the bank. So
far as the total wages of the insurers are concerned, about a third only of all wages
is directly insured in the bank.
The private insurance rather increases the work of the bank, since it necessitates
a large correspondence with, and the rendering of monthly accounts to the com-
panies. The bearers of risk contributed in 1903 a sum of £18,167 to the manage-
ment of the bank.
Section 3. — Proposed Developments.
1. Insurance for Seamen. — Several Bills have been introduced for the purpose
of extending the existing accident insurance system and of instituting compulsory
sickness insurance. In the first place, it is proposed to extend compulsory insurance
against accidents to seamen and to persons engaged in sea-fisheries, and this exten-
sion will be made not only to workmen, but also to employers as far as they take
part in the work on board ship, and thus share the dangers and perils of their trade
with their crews. The insurance bank will pay the medical expenses, and will
recognise incapacity to work from the 92nd day only.
The system will be the same as in the other branches of insurance, with the
exception of some modifications made with regard to the particular character of
this branch of industry. The employer is not obliged to send in statements of
wages, but the compensations will be calculated on the basis of the scale of wages
paid, and will be fixed by an administrative regulation according to the different
■categories of employers and workmen.
These regulations will be modified with the introduction of insurance against
sickness, which will provide for the victims of accidents, either in the first thirteen
weeks or nine weeks, according to different proposals which have been made in
regard to this branch of insurance. The carrying out of insurance against sickness
•will also be intrusted to the State Insurance Bank.
The tarifi according to which the premiums for accident insurance of seamen
are to be fixed will indicate the coefiicients of risk for the difierent types of boats,
taking into account their trade and the extent of their ordinary journeys. The
3)oard of management of the bank will keep a register containing for each case of
62
insurance the name and th.e domicile of the employer, the seat of the enterprise,
the number and the type of the vessel and an indication of the work of the crew,
and wUl calculate the premiums to be paid according to these data. This Bill
proposes also to give employers the right of effecting their own insurance or of
the transfer of their risk to a company, in a similar way to that provided by the
Act of 1901.
Another Bill proposes to transfer the deficiency of the bank to the Treasury, a
deficiency which has increased during the first five years of the working of the Act
on accident insurance to aboat £333,000. This deficiency will probably be decreased
in the future by the revision of the classification of the risks on the basis of financial
statistics, and the revision wiU be made according to a Bill of 1908, which re-arranges
the tarifi by establishing five additional classes.
2. Bill for Invalidity atid Old-age Insurance. — A draft Bill on insurance against
invaUdity and old age has also been submitted. While the BiUs referred to in the
last paragraph provide for the organization of insurance against sickness by the
State Insurance Bank under the same conditions as those laid down for the in-
surance against accidents, the Bill for insurance against invaUdity and old age
contains a proposal for the establishment of a special State Bank for the transaction
of this branch of insurance.
Self-insurance or insurance in a private bank is not permitted by the Bill.
Change of Government has retarded the further development of these projects,
but there is a prospect that they will be passed, and that the Acts will come into
force, in the near future.
CHAPTEE VIII.— SOCIAL INSUEANCE IN THE SCANDINAVIAN
STATES.
Section 1. — Inteoduction.
1. General. — During the last 25 years a strong interest has been manifested in
social policy in the Scandinavian States, and in particular as regards workmen's
insurance. In all three States, viz., Sweden, Norway, and Denmark, voluntary
charitable funds had even before this time attained a fairly extensive development..
Hence legislation, obliged to build on the basis of a new but energetic movement,
accommodated itself to the prevailing views of each of the three States.
2. Different Systems. — Accident insurance is compulsory in Norway, voluntary
in Sweden, and compulsory in Denmark for seamen and officers of ships only.
Sickness insurance is voluntary in all three States ; there are no invalid or old-age
pensions, though efforts have been made to introduce the same.
The tendency towards compulsory insurance resulted in an efiective Act first
in Norway. The legislation of that country will, therefore, be principally referred to.
Section 2. — Compulsory Accident Insurance in Norway.
1. Development of Legislation. — In 1885, a Eoyal Commission was nominated in
Norway for the purpose of making an investigation into all matters concerning
the protection of workmen, legal liability, and workmen's insurance. This Com-
mission submitted in 1890 draft Bills on insurance against sickness and accidents.
The majority of the members of the Commission was in favour of compulsory
insurance.
63
In 1894, insurance against accidents was established. The above-mentioned
Oommission based its project mainly on the German- Austrian example, and accepted
by the " Storthing." The Act received the Royal sanction on 23rd Jidy, 1894, and
came into force on the 1st July, 1895.
In subsequent years three modifications were made, which, however, are not of
great importance.
2. Chief Features of System. — The insurance against accidents concerns chiefly
industrial workers ; the agricultural, sea-fishing, and shipping industries are left out
of consideration. The system embraces factories, mines, manufacture and the
use of explosive substances, the floating of timber, and the loading and unloading
of ships. The Act prescribes an upper wages limit of £66 13s. 4d., workmen whose
annual wages are above that limit not being compelled to insure.
The working of the system of insurance against accidents is intrusted to a
State insurance institution, extending over the whole kingdom, which institution is
authorized to effect also certain voluntary insurances. The costs of administration
are borne by the State Treasury. The institution is assisted by confidential agents,
elected by the State and the municipahties, which share in the payments of their
salaries. The duties of the confidential agents consist principally in the payment
of the compensations. All expenses except those of administration are borne by
the employers.
The premiums are fixed partly according to the amount of the wages and partly
according to the class of danger to which the respective occupation is exposed.
3. Benefits Afforded. — In any case of industrial accident the injured has a claim
for compensation — (a) Should the case prove to be fatal, the family of the deceased
can claim £2 15s. 7d. for funeral expenses, the widow receives 20 per cent, of the
wages, and for each child up to the time when it attains its fifteenth year 15 per
cent, of the wages, with the limitation, however, that the total yearly assistance
cannot be more than 50 per cent, of the wages. In a case where both parents
are dead, the chUd receives 20 per cent, of the wages ; if a widow marries again
she win receive as a final payment thrice the amount of the yearly assistance.
(6) In other cases of industrial accident the injured after the first four weeks follow-
ing the accident has a right of medical treatment or admittance to a hospital.
The Act assumes that the sickness funds pay the expenses for the first four weeks.
If this is not the case, the employer is obhged to render assistance. If the accident
should result in complete invahdity the injured workman may further claim 60 per
cent, of the yearly wages by way of pension, which in any case must not be less
than £8 7s. 5d. In a lesser degree of invalidity the assistance will be proportionately
smaller. In addition there exists a certain hberty to pay the assistance in a lump
sum in cases where such assistance may help the insured to find another way of
subsistence.
4. Proposed Extensions. — Projects are in existence for the extension of accident
insurance to forestal labourers, seamen, and certain agricultural workmen. Another
project which will include fishermen in the compukory insurance is in course of
preparation. The means for this insurance are to be provided by the insured
themselves in connexion with an export tax on the products of the fisheries.
Section 3. — ^Sicknbss, Invalidity, and Old-age Insurance in Norway.
1. Sickness Insurance. — The draft Bill concerning insurance against sickness
had for its basis compulsory insurance by compeUing workmen to become members
either of independent authorized funds or of a general State sickness fund, embracing
the whole Mngdom and subdivided into numerous local organizations. This
64
proposal was accepted by the Government in 1893, and submitted to the " Storthing""
(Parhament) with many modifications, but for various reasons the debate on the
project was postponed from year to year. Neither did a parliamentary commission
nominated in 1900 succeed in gaining a favorable ear for its project. It was not
until May, 1907, that the " Storthing " decided to invite the Government to draft
a BUI on workmen's insurance based on compulsion. This BiU prescribes the
estabUshment of municipal siclaiess-funds, the compulsory premiums of which are
to be paid partly by the employer (10 per cent.), partly by the municipalities
and the State (20 per cent.), and partly by the persons insured (70 per cent.).
2. Invalid and Old-age Insurance. — Greater difficulty was found in regard to
insurance against invalidity. A parliamentary Commission nominated in 1894,
submitted a project for insurance against invalidity, but this was severely criticised,
and like objections were offered to the project of a committee elected in 1900. It
was only in the last " Storthing " that this branch of insurance came again to the
fore, and that the proposal of the Government to nominate a- new committee was-
accepted. The project, which the committee has been ordered to elaborate, is to
be based upon the principle of compulsory insurance for the whole of the people.
CHAPTER IX.— SOCIAL INSURANCE IN FRANCE.
Section 1. — Introduction.
1. General. — The remarkable feature about social insurance in France is the
great variety in the institutions, public and private, which have been voluntarily
organized for the insurance of worlnnen. The study of French conditions is
instructive, especially because France is a country under a " free " repubhcan
regime, and, owing to the dislike for the idea of State " compulsion," the develop-
ment of any comprehensive scheme of compulsory insurance has been retarded.
The various organizations may be classified in three categories, viz.; — (i.) State
Insurance Institutions ; (ii.) Mutual Aid Societies, which are either private or
ofiicially approved ; and (iii.) Employers' Voluntary Funds.
(i.) State Insurance Institutions. — Three State insurance institutions have been
organized, namely : — (a) the Caisse Nationale des Retraites pour la Vieillesse,
estabhshed in 1850 for the provision of old-age pensions ; (6) the Caisse Nationale
d'assurance en cas de Dices, for provision in case of death ; and (c) the Caisse
Nationale d'assurance en cas d'accidents, providing for assurance against accidents.
The two last were created by an Act of 1868.
Though all these institutions are generally voluntary in character, the insurance
of miners with earnings less than £100 per annum, and of seamen, was made com-
pulsory by Acts passed in 1881 and 1894 respectively. The operations of the first
of the above institutions — ^the National Old-age Insurance Bank — ^have attained
large dimensions and are referred to hereinafter. The second and third institutions
differ but httle from private insurance companies, but no provision is made for
medical examination, while, on the other hand, no insurance is paid on death
occurring within two years after the date on which the policy was taken out.
These two institutions have not been patronized to any great extent, and their
utihty has been but small.
(ii.) Mutual Aid Societies. — An extensive system of mutual aid societies has
been developed in France. In 1850, an Act was passed creating a special bureau
for the registration of these societies. This Act required the presentation of annual
reports, and organized the societies under a regular scheme, which subsequent
65
legislation has tended to make more and more systematic. It may here be remarked
that these mutual societies are distinguished from similar organisations in Great
Britain, Australia, and the United States, inasmuch as in France, as well as in most
other continental European countries, they have been regulated and organized into
a general system for the provision of voluntary social insurance. Generally, great
similarity exists among these societies, and the policies which have been pursued
in regard to them in the various European countries. In France, these societies
are also subsidized by the Government, and utilize the National Insurance Insti-
tutions for certain purposes. They may, therefore, generally be considered as
standing half-way between State and private institutions.
(iii.) Employers' Voluntary Funds.— These are for the most part organized by
large industrial concerns, and through their agency a large number of workmen
have been insured without the direct intervention of the State.
2. Development of Systems. — It is not practicable to attempt to follow here the
steps in the evolution of the various classes of institutions down to the present
time. It must suffice to indicate some of the more important Acts under which
development has taken place, and to refer briefly to the scope and characteristic
features of the various systems of social insurance now existing.
Practically, the history of workmen's insurance against sickness in France is
contained in that of the development of the mutual aid societies, in which the most
suitable form for a purely voluntary scheme of sickness insurance appears to have
been found. The legislative organization of these societies commenced under an
Act passed in 1850, which has already been referred to {see para. 1 (ii.) hereof).
In 1852, another Act was passed, dividing the societies into two classes — free and
registered— and granting certain legal advantages to the latter class ; this was
followed by a further Act, passed in 1868. In 1882, the Government commenced
the pohcy of proAdding annual subsidies to the societies for the purpose of encouraging
the development of old-age insurance. In 1898, an important amending Act was
passed, still further systematizing the various societies, which now perform two
distinct functions, viz. : — (a) that of direct sickness insurance ; and (6) that of
acting as intermediaries for the provision of old-age and life assurance through the
Government institutions.
The Act of 1850, by which the National Old-age Insurance Bank was constituted,
has since been amended a nmnber of times. The amendments relate chiefly to the
rate of interest according to which pensions are calculated, and to the maximum and
minimum amounts of the pensions payable. Further reference to the operati«DS
of this bank is made below (see sec. 4).
The most important of the employers' funds are those organized by railway and
mining companies ; there are, however, a large number of other industrial concerns,
which maintain insurance funds for their employes. These funds generally provide —
(a) for old-age pensions ; (6) for pensions in case of premature invahdity or inca-
pacity resulting from an accident ; and (c) in case of death before the pension falls
due for funeral expenses and pensions to dependent relatives.
Several important Acts have recently been passed relating to the habihty of an
employer in cases of accident. The principal Act now in force is that of the 9th
April, 1898, as modified by amending Acts passed in 1899, 1902, 1905, 1906, and
1907. The general scope of these Acts is given in section 3 hereof.
After a prolonged discussion as to the relative merits of compulsory and
voluntary insurance, the first legislative step towards the institution of a compre-
hensive scheme of compulsory insurance was taken in February, 1910, when a
Bill was passed by the Senate providing for compulsory insurance against invalidity
and old-age (see section 4, para. 4, hereof).
C. 12281. c
66
Section 2. — Sickness Insurance.
1. Introduction. — Under tte Acts of 1850 and 1898, provision is made for the
voluntary insurance against sickness of workmen of all occupations. Under an
Act of 1894, the insurance of miners (with annual earnings up to £100) against
sickness and invalidity was made compulsory.
2. Voluntary Insurance. — Voluntary sickness insurance is efiected through
mutual aid societies — free and registered — which have already been referred to.
The Government aids these societies by adding subsidies to the sickness and death
benefits. In 1904, there were 17,182 societies, with a membership of 3,500,000.
The total premiums paid were £1,350,000, or 7s. 9d. per insured person; the
amount paid out by way of benefits, &c., was £933,000, which gives an average
of £2 per sick person, or 2s. per day of sickness.
3. Compulsory Insurance of Miners. — By the Act of 1894, the insurance of
miners with annual earnings up to £100 was made compulsory. Being the first
law passed in France providing for compulsory insurance against sickness and
invalidity, this Act is of great significance. The two operations of sickness and
old-age insurance are kept distinct. To provide for old-age insurance, each mine-
owner must pay into the funds 4 per cent, on the total amount of wages payable
by him ; one-half of this payment must be borne by the mine-owner, and the
other half deducted from the miners' wages. This percentage may be increased
if mutually agreed upon by the mine-owner and his employes. The mine-owner
has the option of making the pajrments either into the National Bank or into a
special fund. As regards sickness insurance, each mine-owner must create an
aid society, the revenue of which consists of — (a) deductions from the employes
wages, not exceeding 2 per cent. ; (&) contributions by the mine-owner equal to
half the sum subscribed by the employes ; (c) subsidies by the State ; (d) private gifts ;
and (e) fines levied for any reason from the employes. The societies are managed
by a joint committee of employes and mine-owners, and the scale of benefits is
determined for each society by its committee. In 1904, there were 199 societies'
funds, having 205,000 members.
Section 3. — Accident Insueance.
1. General. — Though accident insurance is not directly compulsory in France,
it is encouraged and practically made universal by the provisions of the Act {see
sec. 1, para. 2 hereof). Employers are relieved from their liabilities under the general
law for iudemnity in case of accident on condition that they contribute at least
one-third of the premiums payable by their employes in an approved institution,
in. which medical treatment and accident pay of at least 50 per cent, of the average
wages are guaranteed. By Acts of 1898 and 1905, seamen are under a compulsory
accident insurance system admioistered by the State.
2. Voluntary Insurance.— In their general features, the laws relating to the
liabihty of employers to pay indemnities in cases of accidents are similar to the
English Workmen's Compensation Act. The laws include in their scope workmen
engaged in all the important industries, as well as employes in commercial estab-
lishments. The indemnities provide for pensions and allowances in case of total
or partial incapacity, and, in case of death, for funeral expenses and pensions to
dependent relatives. As akeady stated, employers are released from HabUity for
these indemnities if their workmen are insured in the prescribed manner. When
the accident is the result of the wilful act of the employe no benefit is paid, and,
in case of gross negligence, only a limited amount can be claimed. The full benefits
may generally be classified as follows : — (a) For temporarily injured, accident-pay
67
up to 50 per cent, of the daify wages after the fourth day ; (6) For permanent
injuries, pension up to two-thirds of the annual earnings ; (c) In case of death,
pension to dependent relatives up to 60 per cent, of annual earnings, together with
medical and funeral expenses. No benefits are payable unless the incapacity lasts
for four days or more. The insurance is carried out by collective poUcies, generally
in casualty companies or by associations of employers. The National Funds are
but little used for the purposes of accident insurance, but in case the employer
refuses to insure, he must contribute to the State fund, so that in case of insolvency
the worlanan will be paid what he has a legal right to expect.
3. Compulsory Insurance of Seamen.— Undei the Acts of 1898 and 1905, seamen
inust be insured against accident. The premiums are paid into the State funds
in equal proportions by employers and employes. Accident pensions are paid to
the totally disabled, and to the dependent relatives in case of death ; in case of
temporary incapacity a daily benefit is paid.
Section 4. — Invalidity and Old-age Insurance.
1. General. — At present, invalid and old-age insurance is purely voluntary in
France, but an important measure providing a comprehensive scheme for com-
pulsory insurance awaits final legislative sanction. Miners are included in a
compulsory system {see sec. 2, para. 3 hereof), and, under an Act of 1881, seamen
must also be insured in a compulsory system administered by the State.
2. Voluntary Insurance. — Under the existing system, provision is made for
both individual and collective insurance. In the former, persons insured are not
required to contract for fixed payments, but are left practically free as to the
amounts of their deposits. Each deposit gives the right to a pension, the value of
which is determined by the age of the depositor. Bach depositor may ascertain
at any time the amount of pension to which he will become entitled by reference
to the tables of the National Old-age Insurance Bank and to his deposit book.
Collective insurance provides for the insurance of large numbers of persons at the
same time, e.g., where a company desires to insure all its employes. Collective
insurance is stated to have been of great service in encouraging both employers and
employes to make sacrifices to provide pensions for the latter in their old age.
The employers enter into an agreement with the employes to retain a certain
percentage of their wages, to which the employers agree to add a contribution, or,
in some cases, the employers pay the whole of the premiums. The sums are then
paid into the National Bank.
In both individual and collective insurance, a choice is offered of two kinds of
insurance — (a) Capital Aliene, where the depositor considers his deposits as alienated,
and provision is made simply for the pa5anent of an annuity at a given age ;
(6) Capital Reserve, where additional provision is made so that on the death of the
depositor before the provision falls due all deposits are repaid with interest to the
heirs. The old-age pension falls due upon the completion of the fiftieth year of
age, while an invalid pension up to £50 per annum is payable to those who are
disabled before reaching that age.
3. Compulsory Insurance of Miners and Seamen. — Particulars regarding the
compulsory insurance of miners against invalidity and old age have already been
given {see sec. 2, para. 3 hereof). Under the compulsory system for seamen the
insured pay the premiums, and the State adds a subsidy ; a pension is paid after
the fiftieth year, while widows and orphans receive a pension of one-half the
amount.
4. Proposed General Compulsory System. — Under the Bill passed by the Senate in
February, 1910, it is proposed to institute a general compulsory system for all
wage-earners who do not receive a pension from the State, district, or municipality.
68
It is fuitker proposed to constitute an old-age p3nsi(3ns fund, tte revenue of whieh
win be derived from the compulsory premiums payable in equal proportions by
employers and employes, and by further optional payments made by the persons
insured ; in addition, it will receive from the State a life allowance for each person
insured. The compulsory annual payments of each workman (like the contri-
butions of the employer) must not exceed the following maxima r — (a) For men,
7s. 2d. ; (b) for women, 4s. lOd. ; and (c) for persons under the age of eighteen years,
3s. 7d. Special regulations are to be prescribed for wage-earners who work by
contract or piece-work and for home-workers. The option of payment into
" Capital aliene " or " Capital reserve" as in the existing volimtary system, is to
be retained. The payments for workmen are to be deducted from their wages by
the employers on each pay-day. Employes earning over £120 per annum are
exempted from the compulsory provisions, but if their annual wages do not exceed
£200 they can enter the fund voluntarily. If the wages of an insured person are
increased so as to exceed £120 per annum, he is released from the compulsory
provisions, but aU rights are reserved to him. Every insured person is to receive
an annual card on which stamps are to be affixed, showing the compulsory payments
made on his behalf and the optional payments (if any) made by himself. Mutual
aid societies, savings banks, and other fimds legally recognised imder the present
system are, if the members so desire, to be allowed to receive the payments
and to share in all the benefits of the new Act. In such cases the employer
is to affix adhesive stamps for his own contributions only. The amount
of the life allowance to be granted by the State is fixed at £2 8s., and is to be payable
at the age of 65 years. In order to be entitled to the full amount of the allowance,
a claimant must prove — [a) that he has made compulsory payments during
30 years ; and (b) that he has made either compulsory or optional payments during
the ten years immediately preceding the date on which his pension falls due. The
two years of compulsory military service are to be considered as years of regular
payment. The total amount of the pension (payable at the age of 65 years),, includ-
ing the State allowance, is not to exceed £14 8s. per annum. Special privileges are
to be accorded to persons already insured under the existing voluntary system.
An insured person is to have the right at the age of 55 years to demand the antici-
pated liquidation of his pension ; but, in such case, the hfe allowance granted by
the State is to be liquidated at the same time, and its amount will consequently
be rediToed. Employers and workmen who are members of a factory or syndicate
fund are to be released from the compulsory provisions of the Act, provided that
the pensions payable are at least equal to those prescribed, but from the date when
the Act comes into force existing funds which do not satisfy the requirements of
the Act will continue to pay only current pensions and annuities. The capital of
such funds is to be paid into the National Bank, which will inscribe the annuities
in the deposit book of each member. A superior Council is to be constituted under
th« presidency of the Minister for Ijabour, to examine all questions concerning the
working of the Act, and a Commission of Arbitration is to be nominated.
CHAPTER X.— THE PROBLEM OF INSURANCE AGAINST
UNEMPLOYMENT.
Section 1. — Intbobuction.
1. General. — It is considered desirable for various reasons to deal with this
problem in a separate chapter. In the first place, it is by no means certain that
it is even possible to apply actuarial principles to insurance against unemployment.
Secondly, even if these principles be apphcable, the conditions involved in the
organization of such insurance differ so materially from those in other tranches
69
of social insurance, that they must he studied as a distinct ■probl&m. Fuitlier,
though some attempts have been made to provide for such insurance, even a fairly
satisfactory solution of the problem yet remains to be discovered, and a complete
solution seems hopeless in the existing state of human nature. The matter is
referred to more fully hereinafter.
2. Nature of Insurance against TJnem-ploymemt. — A perfected scheme of assistance
to workmen, -when, through any incapacity, they are unable to earn their ordinary
wages should logically include provision in the case of inability to obtain employ-
ment. In the case of physical disabihty resulting from sickness, accident, invalidity,
or old age, it is now generally accepted that insurance in some form ofiers the best
device for relief. It, therefore, remains to consider to what extent this device is
appUcable in malring provision for involuntary idleness not due to physical dis-
ability, nor to degeneracy of wiU. For this last, which is by no means a chimerical
danger, it is apparently impossible to provide.
The definitive characteristics of " insurance " presuppose (a) that the nature of
the risk insured against must be clearly specified, and (b) that the frequency or
chance of occurrence of the risk may be estimated on an actuarial basis and with
a considerable degree of certainty. The risk of imemployment permits of the ful-
filment of neither of these conditions. It can neither be clearly specified, nor
accurately determined. Obviously, it is impossible to state what work each indi-
vidual is competent to undertake or should be required to accept. Moreover,
unemployment may be due, directly or indirectly, to the worlnnan's own fault,
or may be due to strikes or look-outs. It may arise also from the closing of industrial
enterprises in consequence of intolerable or financially impossible conditions created
by workmen themselves. Its occurrence does not depend upon chance, since the
personal element and extraneous circumstances (such as war, climatic conditions,
and the state of trade) enter so largely into consideration. Insurance is concerned
with a risk which can be determined and provided for in advance. It is recognised
by all who have made a serious or responsible study of the question that this cannot
be done in regard to unemployment. And it is because the risk is not calculable
and because, even if it were calculable initially, the creation of an ^insurance
scheme itself introduces a new factor relaxing the motive to accept employment,
that unemployment insurance is fraught with exceptional difficulty.
An examination of the various systems referred to in this chapter will show
that anything in the nature of insurance (in the proper sense of the word) against
unemployment does not exist in any country, and that no efiort has really been
made to create insurance systems. No attempt has been made to actuarially
adjust the contributions to meet the claims, or, indeed, to make the system self-
supporting. The systems of unemployed pay organized by trade unions are not
strictly insurance systems, inasmuch as the benefits cannot be made the subject
of a legal claim, while the contributions are neither specifically allocated as premiums
nor actuarially adjusted. The word " insurance " in connexion with unemployment
must, therefore, be taken in a looser sense as denoting any systematized plan for
granting out-of-work allowances, the payment of which is conditional upon the
previous payment in of specified contributions.
The grave difficulties in connexion with any scheme of relieving unemployment
arising from the morally relaxing tendency of the provision itself is, as experience
has shown, a thing to be feared. It would thus appear that the most funda-
mental difficulty in connexion with insurance against unemployment is that it
proposes to alleviate a social and economic evil, rather than to proceed to its pre-
vention. For, per se, unemployment is evidence of defective social organization,
and should be corrected by improving the organization rather than by alleviating
its consequences. Such alleviation on the whole tends seriously to remove the spui
to effort.
70
It is proper here to observe that a distinction should be made between the
assistance of unemployed and insurance against unemployment, since they are
independent of each other. Assistance of unemployed has regard to the mere fact
of imemployment, whether it was foreseen or not, and without respect to the proba-
bility of its occurrence or duration. Such assistance is made according to the exist-
ing means, the accumulated income, determines the expenses. On the other hand,
insurance is a social function based on mutuality, and one which as a means
to its ends, aims through accumulation of funds at carrying the load, when it is
impossible for the individual person to do so. Insurance against unemploynient
based on this idea of " insurance " gives the unemployed a legal right to
assistance, and not merely an expectation, as would be the case with any scheme
for simply alleviating the condition of the unemployed.
3. Causes of Unemployment. — The causes of unemplojanent are various, for
example, unfavorable weather and seasonal conditions generally — especially in
countries which have severe winters — affect agriculture, the building trades, &c.
In other cases, trades are characterized by a seasonal activity, and occupy a much
greater number of workmen at particular times than can be provided with permanent
employment. Change in the conditions of the money market also exerts an influence
on unemployment. It is said, however {e.g., in Germany), that the number of
rmemployed through the latter reason is much smaller than that depending on
seasons.
One of the great practical difficulties of estabhshing insurance against unemploy-
ment lies in the fact that in many cases it is well nigh impossible to ascertain whether
the unemployment is attributable to default on the part of the insured or not.
In order to become an object of insurance, unemployment must obviously not
be markedly subject to the caprices of himian wills. This principle dominating
the whole scheme of insurance, indicates the special nature of the risk of unemploy-
ment. Thus, it is not merely the final decision of the workman which has alone to
be taken into consideration, but also the conditions which lead up to such decision.
A workman, for example, who abandons his work, though voluntarily unemployed,
may have justly discarded his employment, and his decision to abandon it is not
necessarily a merely arbitrary exercise of his personal will, but may be a consequence
of a situation forced upon him, or of one from which he undoubtedly has the moral
right to free himself, provided he respects the legal position.
On the other hand, where workmen " strike while working," that is to say,
where they intentionally reduce the productiveness of their work so as to force
the employers to declare a " lock out," the ensuing unemployment, though in-
vohmtary, is the consequence of their intentionally defective work. Although the
unemployment, per se, is not the direct result of a decision of the workmen — since
it has been brought about by the employer declaring the lock-out — it is virtually
the direct result. Thus, from the standpoint of insurance, unemployment is
voluntary, not only when the workman refuses to work, but also whenever he renders
work impossible through the systematic adoption of an attitude which will bring
this about, though the actual interruption of the work may actually be decided
by the will of the employer.
This interruption is consistent both with justice towards the workmen as with
the interest of workmen. If the necessity of a lock-out is imposed on the employer
by the coiiduct of workmen, a change of this conduct is sufficient to cause the
employer to re-open his estabhshment and the recommencement of work thus
depends on the will of the workmen. The lock-out and the strike constitute two
parallel situations ; consequently, the insurance of the workmen against unem-
ployment must be established on the same principle as the insurance of the employers
71
against strike ; the mutual societies with which the latter have made their insurance
would act justly in refusing their payments, if the strike were the result of an
improper attitude towards the workmen.
Insurance against unemployment cannot accordingly, in times of lock-out,
grant its benefits to workmen who have rendered the continuation of work impos-
sible. In the complete view it is seen to be in the interest of workmen to accept
the consequences of their own default, so that insurance may constitute a sure
protection where their unemployment is not really due to their default. It results
that the insurance can only grant payments in cases of justifiable unemployment,
and this term should be substituted for the term " iavoluntary unemployment."
Any proposal for " insurance " against all unemployment cannot for a moment
be entertained by any serious student of the question, and would be certain to
end in faUure.
4. Historical Development. — As early as 1819, Simonde de Sismondi advanced
his Theory of Unemployment. He proposed that all employers should be organized
into associations according to their occupations or trades, and that these associations
should be obliged to maintain all the unemployed workmen in each of their
respective occupations. He based this proposal on the idea that, since employers
receive the profit which results from the labour of their employes, they should also
support them in times of unfavorable conditions. But he did not enter into any
detailed consideration of this form of insurance, no doubt because of the immense
difficulties which inhered in such a system. This idea of compulsory insurance
against unemployment, when not attributable to default of the workmen, was taken
up later by " Mario," Schaffle, and Adolf Wagner.
In 1818, General van den Basch organized agricultural colonies in HoUand,
where unemployed were engaged to work. This system was followed elsewhere,
but although these colonies proved of great benefit in individual cases, they could
by no means be considered a general remedy against unemployment.
An opinion has gained ground that the State and the municipahties should
procure work for unemployed. But experiments in various directions have finally
led to the conclusion that some insurance should be established with the aim of
insuring workmen against periods of unemployment (not caused through incapacity
to work), such insurance to give them a claim for certain support in such times.
This idea has rapidly developed in recent years, and the periods of widespread in-
dustrial depression which have occurred in most countries have led to attempts
being made to provide against unemployment through some system of insurance.
Section 2. — Experiments on the Continent op Europe.
1. Switzerland. — The experiments inaugurated in Switzerland relate to —
(a) direct compulsory unemployment insurance created by the town of St. Gall ;
(6) direct voluntary insurance by the municipality of Berne ; (c) direct voluntary
insurance fund estabUshed at Basle, with Government subvention.
(a) St. Gall. — By an Act of 1894 the Canton of St. Gall authorized local authorities,
either singly or in combination, to institute compulsory insurance against unem-
ployment. After an abortive attempt to unite with two neighbouring communes,
the town of St. Gall established a fund for compulsory insurance, and commenced
operations on the 1st July, 1895. The principal features of the system were as
follow : — Membership was compulsory for all workmen whose daily wages did not
exceed 4s., excluding apprentices and youths earning less than Is. 7d. a day. Men
witli eaming3 above 4s. a day might join voluntarily. Weekly premiums and
tlie amounts of the benefit were determined according to three wage classes, as-
follow : —
St. Gall.-
-CoMPULSOEY Unemployment Insurance — Wage Classes, Premiums, and
Benefits.
'Average Daily Earnings
Weekly premium
Daily benefit
Up to 2s. Sd.
Over 23. Sd. up to
3s. 2id-
Over 3s. SJd. up to
4s.
s. d.
n
1 5"
.. d.
2
1 8
.?. d.
3
1 11
No member could claim benefits for more than 60 days in the year, and unless
he had paid premiums for at least six months. Contributions were paid by the
purchase of special stamps, and were excused during actual receipt of an unem-
ployment benefit or during incapacity for work due to sickness or accident, for which
no insurance benefit was payable from other funds. The claim to a benefit was
forfeited if the member were without work as the result of his own gross fault,
had ceased work through a strike, or had refused, without just cause, employ-
ment offered him, this la&t being by no means an unusual occurrence.
In addition to premium contributions the insurance fund received a grant by
the town up to Is. 7d. per member per year in addition to costs of administration,
and a subsidy from the Cantonal Government. The fund was administered by a
Commission of nine members, seven of whom were appointed by the workmen
belonging to the fund and two by the municipahty. The detailed administration
was carried out free of cost by the municipahty.
The results of the working of the fund led to it being closed at the end of its
second year of operation (30th June, 1897). The premiums decreased from £86T
in the first year to £636 in the second, but the benefits paid increased from £890
to £1,535. The number of members decreased from 4,220 to 3,035. The State
paid a contribution of £240 and the municipality £885, yet the fund closed with
a deficit of £181.
The failure of the scheme was due as much to grave faults in organization and
in the spirit in which it was administered as to the inherent difficidties of the problem
itself. Perhaps the greatest fault was the absence of any discrimination between
different trades. This would appear to be a fundamental practical objection.
Employes in trades having steady employment were made to contribute to the
insurance of workmen, such as those in the building trade, who are certain to be
unemployed during some part of the year. A second objection was the difficulty
experienced in enforcing the compulsory feature ; the means of securing regis-
tration and payment of contributions was inadequate. Thirdly, no proper control
was exercised in regard to the payment of benefits. No efficient labour exchange
was connected with the scheme, and there was therefore no proper control over the
unemployed.
(6) Berne. — A municipal fund for unemployment was established at Berne in
1893, provisionally for two years only, as an experiment. In 1895, the town council
decided to continue its operation and to amend the original constitution and by-
laws. The municipal labour bureau, which had previously been an independent
service, was, in 1895, amalgamated with the insurance fund, under the control of
three employers, three employes, and three nominees of the town council. The
73
Tate of eontributian is 6|d. per month, wMe the municipality pays an annual
subvention of £480. Members cannot claim benefits unless they have belonged to
the fund for at least eight months. The institution has now been in existence
for a period suf&ciently long to furnish some indication of its results.
Bbunb. — Unemployed Insurance Fund.
1893-4
190SH6
Numbei
of
Hembeis.
Persons Insured who
became Unemployed.
Number
on total
Members.
216
234
61
38
Receipts.
Contributions
of
Total.
Members.
£
£
45
313
188
761
Expenditure.
Benefits
to
Unemployed.
Total.
£
£
274
249
313
267
In 1906, the contributions by persons insured amounted to 76 per cent, of the
total amount of benefits paid and to 25 per cent, of the total receipts, which in
addition to the municipal grant of £480 and contributions, £188, included grants
by employees, £54, and voluntary donations, interest, &c., £39.
(c) Basle. — In 1900, a proposal for compulsory municipal insurance was rejected
by referendum by the Canton of Basle. Its rejection was followed ia 1901 by the
establishment of the unemployed insurance fuiid of the labour federation. This
fund depends on mimicipal and voluntary grants as well as contributions of the
insured persons ; it difEers from the Berne fund, in that it is managed entirely by
workmen. The contributions of members are graded according to wage-c'
as follows : —
Basle. — Voluntaby Unbmploymbnt Insurance — Wage Classes and Contbibutions.]
Average Daily Earnings
Up to 3s. 2id.
Above 3s. 2id. and
up to 4s.
Above 48.
Monthly contribution
s. d.
4i
s. d.
5J
s. d.
6|-
The membership has decreased from 866 in 1901 to 457 in 1907, and the contri-
butions of members from £87 to £84, while the allowances to unemployed in the same
years increased from £114 to £291. The unemployed allowance for all wage-classes
is Is. 2M. per diem, and the maximum period during which the allowance may be
paid is 42 days, with a waiting time of seven days.
The fund is apparently threatened with dissolution. There has been a continual
increase in membership of building operatives and others subject to irregular
employment and a falUng-ofE of the workmen in regular trades.
2. The Ghent Bystem. — Several Belgian and French towns have organized
insurance against unemployment on the principle of what is known as the Ghent
system, because it was first introduced in the town of that name. In this system,
the amount of the subsidy contributed by the State is governed by the amount
subscribed by the trade unions.
7i
(a) Ghent. — In this town an unemployment inBurance fund was established in
1901, and was extended to the suburbs, comprising a population of over 187,000,
in 1904. The fund is composed of subsidies voted annually by the several muni-
cipalities and of sums paid by trade unions. It is administered by a committee of
ten members, of whom five must be members of the affiliated trade unions, three
must be members of the municipal council, and one is appointed by each of the
suburban municipalities. The fund may be used either — (i.) to supplement allow-
ances paid by unions to men out of work ; or (ii.) to supplement savings made to
meet unemployment. The second purpose was designed to disarm the criticism
that the fund forced the men into trade imions. The subsidy paid by the muni-
cipalities for the first purpose may not exceed the actual amounts of allowances
paid by the unions to members out of work, and may not be more than 9Jd. per day,
nor paid to any one person for more than 60 days in the year. The subsidy may not
be paid in respect to strikes or lock-outs, nor in respect of sickness or invahdity.
Workmen who are not members of any affiliated trade union may share in the
benefits of the fund, either by maldng deposits in a special bank, to be withdrawn
during miemployment, or indirectly as members of affiliated thrift associations.
A labour exchange which, it is stated, forms an indispensable complement of the
organization of the fund, is in close relation with the unemployment institution.
In 1905, the institution embraced in all 33 associations, witli a membership of
11,736. The municipal council of Ghent contributed £800, exclusive of the contri-
butions of the suburban municipahties. The total amount paid to unemployed
was £2,147, of which £1,423 was paid out of the associations' contributions, and
£724 out of the municipal subsidies.
(6) Belgian Towns and Provinces. — Several other Belgian towns (and some of
the provincial authorities) have followed the example of Ghent, so that in 1907
there were 27 municipal funds in activity. In Antwerp, the fund in 1904 comprised
26 associations with 7,568 members ; the sum of £3,364 was paid to unemployed,
of which sum £2,232 was contributed by the associations and £1,132 by the muni-
cipahty. In 1907, the 27 funds in existence in Belgium had 284 trade unions
affiliated ; in the same year, 9,750 people drew unemployment allowances in respect
of an aggregate of 113,726 days of unemployment. The municipal subventions
amounted to £2,968, or to 46 per cent, of the total sum paid as unemployed
allowances.
In aU these institutions the general results have been similar to those in Ghent —
considerable use of the municipal subsidy, but partial or complete failure of the
provision for unorganized workmen.
In the Budget for 1908, the Belgian Legislature voted a sum of £800 as a grant
in aid of free labour registries and of thrift and other funds.
(c) France. — In France, there are several towns, as Lyons, Rheims, Amiens,
and other communities, which have followed the example of Ghent, while Dijon and
Limoges established insurance against unemplojTuent with municipal contributions
based, however, on a difierent system.
Contributions are also made by the French Government, and in 1906 the sum
of £4,000 was appropriated for contribution to unemployment insurance funds.
The extent of participation in this contribution may not exceed 16 per cent, of
the total allowance paid by a fund ; but in the case of funds operating in at least
three different departments, and having a paying membership of at least 1,000
members, this maximum may be increased to 24 per cent.
In 1906, the State contributions amounted to £1,700. This sum was divided
between 64 funds, whose expenditure on unemployment allowances totalled £8,660.
75
[d] Italy.— In Italy, similar, but private institutions, exist in Bologna and
Venice, but their results are not encouraging. A bank was also instituted by the
Societa Umanitaria in connexion with other societies in Milan in 1905.
(e) Holland. — Within the last few years the practice of encouraging insurance
against unemployment by municipal subventions to supplement benefits paid by
trade unions has been adopted in Holland. This has been done in Amsterdam,
Utrecht, and Arnhem since 1906, and in Hilversum since 1907, and similar schemes
are now in force or are about to be put into operation in various other towns. These
Dutch schemes are modelled on the Ghent system, so that detailed description of
their provisions is not necessary.
3. Germany. — In Germany, the trades unions which have established funds for
the assistance of the unemployed have made a number of proposals for insurance
against unemployment for the whole Empire. In order to formulate a scheme,
a comprehensive inquiry has been made regarding the existing systems of assistance
and insurance of unemployed in the Empire and in foreign countries.
Direct voluntary insurance against unemployment has been estabhshed at
Cologne and Leipzig, while in Strasburg the Ghent system has bsen in force since
1907.
(a) Cologne. — In this city, the insurance fund has been in existence since 1896.
The fund is composed of contributions of the insured, grants from the muni-
cipality, voluntary subscriptions, and interest on capital acclimulated ; these items
amounted in 1907 to £860, £1,000, £128, and £318, respectively. The executive
committee consists of 24 members, of whom twelve are representatives of the
insured, and twelve are honorary members (subscribers) elected at a general
meeting. Insurance is voluntary, is confined to males over eighteen years of age
and resident in Cologne for at least a year, and protects against winter unemploy-
ment only. Casual labourers are excluded. Insurance is for each winter separately.
The premiums are — for unsldUed men, 4Jd. weekly for 34 weeks (total 12s. 0|d.) ;
for slalled men, 5|d. weekly (total, 15s. 7d.). The allowance is 2s. a day for twenty
days, and Is. a day for a further 28 days, with a waiting time of three days. In
1907, there were 1,155 persons insured in the fund, and of these, 980, or 84"8 per
cent., notified themselves as unemployed. The fund became Hable for 42,324 days
of unemployment, while 18,238 days' temporary emplojrment were found through
the labour exchange, leaving 24,086 days for wHch unemployment allowances were
made. The total amount paid out for allowances was £2,001, and the premiums of
insured members amounted to £860, or 43 per cent, of the allowances paid.
The solvency of the fund is guaranteed by a rule forbidding new membsrs to
enter the fund, so soon as the claims for allowances amount to two-thirds of the
whole fund. A great advantage to this fund is its close connexion with an efficient
labour exchange. The very large percentage of the insured who became unem-
ployed is due to the fact that the fimd is used chiefly by men in the building trade ;
it must therefore be regarded as a relief institution for a particular class of workmen
rather than an insurance ; on the other hand, it may be argued that the claimants
have a legal right to the benefits, and therefore that the fund is not a reUef
institution.
(&) Leipzig. — In this city a fund has been in existence since 1905, under the
management of a voluntary association, as in Cologne, but without municipal
support and without any connexion with a labour exchange. Members are divided
into four classes, according to the degree of irregularity in their occupations, the
weekly contributions being 3Jd., 4|d., 6d., and 7Jd. This is the only scheme under
which such a division has yet been made. The benefits are available only after
payment of at least 42 weekly contributions, and amount to Is. 2Jd. a day for
76
42 days. In 1906, there were 143 members, of whom thirteen became miemployed
for 285 days in all, and were paid allowances amounting to £12. The premiums
amounted to £33, showing an excess of £21 over benefits paid. The year was one
of exceptional industrial activity, and the fund was assisted by voluntary
subscriptions.
(c) Strashurg. — In Strasburg, the " Ghent " system has been in force since 1907,
The municipal subsidy may be paid only in respect of persons in receipt of an
unemployment allowance from a trade union ; it amounts to 50 per cent, of such
allowance, but may not exceed Is. a day ; it is conditional upon daily appearance
at the labour exchange, and it may not be paid in respect to unemployment from
strikes, lock-outs, sickness, or accident, or to persons who have been resident in
Strasbujg less than a year,
i
4. Norway and Denmark. — In Norway, an Act was passed on the 12th June,
1906, providing for the establishment of free public labour registries, and prescribing
contributions by State or municipalities to insurance funds. This Act will be in
force till the end of 1911. According to its provisions, Norwegian insurance
funds, organized in accordance with the prescribed conditions, may claim one-
fourth of their actual payments in allowances to unemployed.
Two-thirds of this State contribution are refunded by the districts and muni-
cipalities to the State. The claims may be made only by banks which can show
that half of their income consists in contributions paid by its members. The Act
also induces trade unions to grant insurance to workmen who do not belong to a
union.
The Danish Act on recognised insurance funds for unemployed, dated the 9th
April, 1907, must not be revised till after 1912. The regulations of these funds
must conform to the conditions of the Act, and must be approved by the Minister
of the Interior after recommendation by the Inspector for Unemployment.
The State pays a yearly contribution of a third of the total of the premiums
paid into the fund, but the total of these contributions may not exceed £13,888.
It is said that in no nation in the world is the proportion of the working classes,,
who are members of trade imions, so large as in Denmark, where it is estimated
to be between 40 and 50 per cent., and this condition facilitates the establishment
of insurance against unemployment to no small degree.
The Act prescribes certain general rules for the working of the insurance funds..
The principles expressed in legislation on unemployment ia Nor.way and Denmark
may be summed up as follows : —
(1) The resources at the disposal of funds, maintained by the contributions
of workpeople associated together for the purpose of enabling their
members, if they become unemployed, to draw benefits on an agreed
scale, are properly supplemented from the public purse, the funds
thus subsidized being, so far as possible, organized separately for
separate trades or groups of allied trades.
(2) These arrangements should possess a national (inter-local) character.
(3) It appears desirable that any scheme of publicly assisted unemployment
insurance should be operated in close connexion with an efficiently
organized system of labour registries.
• Section 3. — Proposed Scheme in Great Britain.
1. Introduction. — In their trade imions. Great Britain and Ireland possess the
oldest institutions for assistance in cases of unemployment. The English Board
of Trade has made inquiries as to the average duration of unemployment in the
case of the Amalgamated Society of Engineers of the Districts of Manchester and
n
Leeds, but general data as to the duration of unemployment are lacking. Tte
entrance fee in trade unions varies according to the age of the member, while ihs
assistance varies according to the trades. All workmen must inscribe their
names, and are compelled to accept any work ofiered to them by the society.
If any one without sufficient reason declines an ofEer, he wholly loses his right.
In the years 1891-94, the Royal Commission on Labour inquired into the conditious
of labour, and submitted its report. The unfavorable conditions of labour in 1894
brought about another Parliamentary Committee on Unemployment, and ilbs
" Report on Distress from Want of Employment." The final result of this was
that the Committee was unable to recommend any compulsory provision for work
for the unemployed. Various temporizing expedients were proposed, for example,
the foundation of Workmen's Homes by the Church Army, and the establishment
of the Farm-colony at Hadleigh, also supported by the Church Army.
2. Unemployed Workmen's Act 1905. — Extensive unemployment in 1903 led to
the nomination of a second " Mansion House Committee on the Unemployed."
In 1904, the President of the Local Government Board proposed a scheme
to combat unemployment by estabhshing in London and all principal towns
a committee to inquire into all cases of unemployment, and to classify
applicants according to the cause of their unemployment. In this way, the
committee hoped to ascertain whether the difficulty was that of persons willing
to undertake work, but unable through imfavorable times to find it, or whether
the imemployed merely shunned work.
The former class were to be recommended to the magistrates or central com-
mittee, while the latter were to be subjected to the " Poor Law." The funds, it
was proposed, should be found by subscription, if necessary, by increased local
taxes. The committee pubUshed its first report in 1905.
The Government took the question up, and submitted in 1905 to the two Houses
of Parhament a Bill prescribing that work should be found for the unemployed
by local and central administrations. This " Unemployed Workmen's Act " 1905
provided that local authorities should contribute towards the provision of temporary
work as a means of meeting the pressure of exceptional trade depression. The Axjfc
expired in 1908.
3. Labour Exchanges. — Under the Labour Exchanges Act 1909, the establish-
ment in Great Britain of labour exchanges was provided for on national lines, as
distinguished from the municipally organized exchanges of Germany. These
exchanges will be organized in close relation with the proposed unemployment
insurance scheme referred to in the following paragraph hereof.
The Board of Trade is authorized to establish labour exchanges, to take over
by agreement existing exchanges, and to collect and furnish information as to
employers requiring workmen. Regulations may authorize advances to be made
towards meeting the expenses of workmen travelling to places where employment
has been found for them through a labour exchange. The country is divided into
ten sections, each with a clearing-house co-ordinated with a central clearing-house
in London. It is stated that, when completed, the system will comprise from
30 to 40 first-class exchanges in towns with a population of 100,000 and over,
45 second-class exchanges in towns with a population of from 50,000 to 100,000,
and about 150 third-class exchangee and waiting rooms. The scheme is voluntary
in character, and the estimated cost is £200,000 per annum. Special buildings
are being erected, and afford facilities for the washing and mending oi clothes, and
for obtaining non-alcoholic refreshments. The chief functions of the labour
exchanges are to provide for the registration of applicants for work, and to watch
the changes of the labour market, thus providing for the mobility of labour. The
78
developing principle in the labour exchange idea — a principle which is lacking in
the German system of municipal exchanges — is the " decasuaUzation " of labour,
This principle has been stated as follows* : — " That all the irregular men for each
group of similar employers should be taken on from a common centre or exchange, and
that this exchange should so far as possible concentrate employment on the smallest
number that wiU suffice for the work of the group as a whole ; that successive jobs
under diSerent employers should so far as possible be made to go in succession to
the same individual, instead of being spread over several men, each idle for more
than half his time." The systejjj^viil thus render possible discrimination between
the loafer and the honest workman. The abolishment of casual labour and the
regularization of work for some men will, of course, result in others being left
without any prospect of emplo3mient, and for these persons other agencies — such
as emigration, afforestation, and labour colonies — are to be called into use.
4. Proposal for Unemployment Insurance, 1909-10. — Among the schemes brought
forward in connexion with the recent Budget, special interest attaches to the
proposal made by Mr. Winston Churchill for a system of unemployment insurance ;
this is the first scheme of its kind put forward on a large scale in any country.
Since no precedents for such a comprehensive scheme existed, the proposal is
an entirely new development, certain to awaken great interest in all other countries
where the solution of this problem commands the grave attention of the thoughtful.
The main features of Mr. Churchill's scheme are these : — The insurance is
to be — (a) compulsory ; (6) contributory ; (c) divided up into different sections
for different trades.
That compulsion was essential appeared clearly at the outset. Voluntary
schemes fail for the reason that under them the insured would largely consist of
the workmen most likely to be often unemployed, and a successful scheme is possible
only by striking an average among the good and indifierent workers.
Contributions from workmen and employers were also deemed to be necessary.
In addition to other reasons the mass of industrial workers must be directly
interested in maintaining the institution ; with a " stake " in the coim.try ia the
form of insurance against evil days, workers are less likely to heed vague pro-
mises of an impossible condition of things. Division into trades is desirable
because (a) it tends to bring masters and men together in the common interest ;
(b) it tends to regulate employment so as to avoid paying out-of-work allowances ;
and (c) it confers the power to deal with any one trade suffering depression, because
the scale of contributions or allowances could be modified without affectiag other
trades.
The history of labour fluctuation has shown that the trades most severely
affected are the building, ship-building, engineering, construction works generally,
and the carriage -bull ding.
These, therefore, are to be the trades in which itisurance is to be first intro-
duced. They find employment for about 2J miUions of workers, viz., one-third
of the total number engaged in purely industrial occupations. The amount of
contributions not definitely fixed will be something like 2|d. a week from workmen
employers, and the State.
Every worker is to have an insurance card on which stamps to the value of
his own and his employer's contribution must be affixed weekly, a method largely
employed in Germany. If an employer prefers, he may send his worker's cards
to the local labour exchange, and transmit a weekly cheque to the exchange. The
cards will then be stamped there. The labour exchange and the actual details of
insurance must be closely connected in the working-out of the scheme.
• See " Insurance against Unemployment "—Actuarial Society of N.S.W., by J. Farrell.
79
As soon as a worker is out of emplojrment, h.e must report himself at the exchange,
which will immediately endeavour to find work for him. For the first week he
receives no payment. If, in despite of all efforts on the part of the exchange and
himself, no occupation can be foimd for the workman, he will receive about 8s.
a week ; after seven days this may continue for fifteen weeks, or more if the benefits
are slightly reduced. If it continues for 20 weeks and he is stiU unemployed, he
drops out of the scheme, and if afterwards he obtains employment, he must re-enter
the system afresh. Twenty weeks would, however, cover the whole period of unem-
ployment in nine cases out of ten in the insured trades.
On the second occasion, the workman must subscribe longer before he becomes
ehgible for benefit. The original period for probation is fixed at about eight months.
The second period (for those who have dropped out), will be more extended, and the
third more lengthy still. This has the effect of freeing the fund of those who are
habitually unemployed for long periods. The scheme is meant for regular com-
petent workers. The frequently out-of-work must seek rehef from the distress
committees or the Poor Law, and are outside the scope of the labour exchanges
and insurance system, siace this is in no sense a charitable institution, but an
economic business arrangement founded on a mathematically determiaed basis.
The amount of yearly subsidies to be paid by the State is to be about
£1,500,000 (including the cost of administration). A big employer, paying wages
to about 500 men, would have to pay a yearly contribution of about £250.
Arrangements would be made to enable individuals or associations of work-
men outside the insured trades to iusure against unemployment voluntarily
at the State Ofiice, but in this case the terms ofiered, though better than any that
can be obtained now, are necessarily inferior to those secured in the compulsory
trades where all employers and workmen unite.
Mr. Churchill regards insurance as a safeguard for the future contentment and
prosperity of the industrial working class, and does not beHeve that trade unions
will be afiected adversely. Many of these give no out-of-work benefit and, at any
rate, the allowance under his scheme will be less than the rate paid by those which
do.
Trade unions have so far not shown any hostihty to the scheme, and arrangements
will be possible under which they can administer the State scheme for their own
members.
There would be conferences at the Board of Trade in which all parties interested
will be invited to share. After these conferences the plan is to be confirmed, ready
for presentation to ParUament this year.
But, of course, it all depends upon the Budget being passed and the money being
provided for the expenses of the scheme.
Section 4. — General Conclusions.
1. Introduction. — It may be gathered from the particulars given in this chapter
that the problem of finding an efficient and satisfactory system of unemployment
insurance, even in a stable and well-organized community, is one of enormous
difficulty. It will be well to now refer briefly to some of the more important diffi-
culties which are met with, more especially in connexion with the fundamental
principles of social insurance. It may, however, at the outset be pointed out that
the application of these principles in their entirety to unemployment insurance
is an impossibility, since the risk of unemployment cannot be calculated actuarially.
2. Voluntary or Compulsonj System. — It would appear that, in order to be in
accordance with the fundamental principles of social insurance {see Chapter I.,
sec 1 para. 2, hereof), any scientific system of unemployment insurance must
be founded on a compulsory basis. There are, however, considerable difficulties
in the practical application of such a principle. In St. Gall, the only place in which
80
compulsory insurance has been tried, tke greatest difficulty was experienced in
coHeeting the premiums. On the opening of the fund in that town, workmen were
invited by public notice to register themselves in accordance with the law. Their
response was very slow and reluctant, especially with regard to employes in trades
giving regular employment. Numbers of persons were fined, after repeated
warnings, for not registering themselves, and of those who were registered many
were constantly in arrears with contributions. A possible solution of thLs difficulty
would, however, appear to be to make the employers responsible for the payment
of the premiums out of their employes' wages [e.g., by fixing each week an adhesive
stamp, as is done in other branches of social insurance). For this purpose it would
be necessary for each employe to have a card of identification, and also for the
administration of the system to keep a dossier with regard to the employment and
imemployment of each member of the fund. As a general discipline this would
no doubt be advantageous in many ways.
The great defect of the schemes for voluntary insurance [e.g., those at Berne,
Basle, and Cologne) is, as might be expected, that they attract only workmen in
trades which afiord irregular employment. They are thus merely relief funds for
certain classes of worlanen rather than insui'ance funds ; they are not com-
prehensive, but exist only on a small scale, and owing to the large percentage of unem-
ployment amongst their members, the expenditure cannot be covered by
premiums.
The same tendency to accumulate bad risks may be observed in the case of
subventions in aid of individual saving, as adopted in the Ghent system (see sec. 2,
para. 2, hereof). The payments made by the workmen in that scheme are not
really of the nature of insurance premiums, but are deposits which may be with-
drawn during unemployment, with a State or municipal subsidy.
Up to the present, niunicipalities in Germany have no legal authority to intro-
duce compulsion, and this is the chief reason why they have been unable to establish
any reaUy definite scheme for insurance against unemployment.
3. Differentiation of Risks. — Though the risks of unemployment in the various
trades cannot be calculated, it is stated that the great differences in these risks
necessitate the discrimination in any general scheme of unemployment insurance
between either the rates of contribution or the allowances payable. This matter
is one of considerable difficulty. In the first place, the principles of social insurance
do not require any such differentiation. All insurance is socialistic and involves
the distribution of the loss primarily suffered by the individual. The effect of not
differentiating the risk, but of following fundamental principles, would be to throw
upon the regular trades a very large part of the burden of irregular employment
in other trades ; it would also lead to the conclusion that, in order to attain the
widest possible distribution of the loss, some part of the premiums should be paid
by the employers, either directly by contributions or indirectly by a suitable adjust-
ment of wages. It is understood that it has quite recently been proposed in Ger-
many that part of the contributions should be paid by the employers. The funda-
mental principles of insurance cannot, however, be carried successfully beyond the
point up to which they are supported by tradition. The attempt to carry them
too far leads to open revolt against compulsory schemes as at St. GaU, and abstention
from voluntary ones as at Berne and Cologne. On the other hand, if these principles
are entirely neglected, any scheme of insurance, under which all or the majority
of insurers are " bad hves," is foredoomed to failure.
These difficulties would appear to be almost entirely due to the fact that under
present conditions the degree of motive for unemplojmient insurance must necessarily
vary in different trades. In order to obtain any general system, the practical
necessity therefore arises for reconciling the difficulties either (a) by adjusting the
81
difieience in risks by a corresponding differentiation of premiums or allowances ;
or (6) by reinforcing the motive for insurance by some other motive, so as to cause
the eiiect of difference in risk to be minimized. Both these methods are, however,
open to objectioHB.
(a) Adjustment of Risks. — In the first place the adjustment of premiums or allow-
ances according to risk would have the effect that the contributions received
from worlonen in regular occupations would be relatively small and the system
would tend to suffer from the defects of a voluntary system {see para. 2 hereof).
If, however, the industrial organization and distribution of occupations in the
community were such that there was relatively a large number of workmen in regular
employment, these defects need only arise in a small degree. The only system
in which differentiation of risks has been tried is that at Leipzig, which is only on a
small scale (see sec. 2, para. 3 (6) hereof). As already pointed out, want of differen-
tiation in risks was one of the chief causes of the failure of the compulsory system
at St. GaU, while the voluntary systems at Berne, Basle, and Cologne, originally
organized for all trades ahke, have become practically confined to the building
trade.
(b) Reinforcement of Motive for Insurance. — This method is somewhat difficult
of achievement. It may to some extent be brought about by subsidies and grants
• — some of the employes would be more willing to contribute if they were to secure
the benefits of State or municipal subsidies or of charitable grants. Another
motive — ^exempMed more particularly in trade unions — may be the desire to main-
tain a standard wage by keeping unemployed competitors from want. These
two motives form the essence of the Ghent system, which is, however, open to serious
objection (see para. 4 hereinafter) on other grounds. Another motive, which is
becoming recognised in Germany, is the desire to receive special consideration -at
the hands of the labour exchange in the search for employment.
Whether either of these methods or any others wiU enable the difficulties resulting
from unequal risks to be overcome, and wiU render it possible to devise a system
generally applicable to all classes of workmen, can be determined only by future
experience. Much depends on the bona fides of workmen themselves. Any relax-
ing through relief of their moral fibre will ruin any system whatever, and it has
yet to be discovered how far the compulsion of ^lecessity is a permanent, though
probably subconscious factor, in determining human industry.
4. Defects in Ghent System. — Perhaps the most remarkable development in
unemployment insurance on the continent of Europe is the increasing popularity
of the Ghent system of subsidizing trade unions or other associations which make
provision against imemployment. While this system has imdoubtedly resulted
in a considerable development in the payment of unemploynaent allowances on the
part of affiliated trade unions, yet it has certain grave defects owing chiefly to the
great limitations of its scope. In the first place, it does not appear that the system
has been extended to any classes of workmen other than those which, through
trade unions, abeady make provision for unemployment benefits. The members
of these unions belong generally to the more Mghly-skiUed and better organized
classes of workmen. The provision made at Ghent for unorganized workmen (which
provision has not generally been adopted by other places where the Ghent system
has been estabUshed) has been practically a complete failure. The unskilled and
unorganized classes of workmen, among whom it appears that the bulk of unem-
ployment occurs, have not been touched. The success of the system lies, therefore,
almost entirely in the stimulus which has been given to existing unemployment
organizations.
5. Organization. — Methods of organization depend of course upon the nature of the
scheme adopted. Fundamentally, for a compulsory scheme without differentiation
82
of risk, the most suitable oTganization would be on a national or inter-local
basis witb labour excbanges in all the important industrial centres. The great
advantage of such an organization would be the opportunity afforded for complete
mobility of labour. Here, again, however, another practical difficulty arises —
it has been found in Europe that workmen are not willing to leave their usual places
of residence to take employment in other districts. Probably the most efficient
practical organization, permitting of difierentiation in premiums, would be by
trades. This would have the advantage that it would tend to reduce the
chances of fraud or " simulation " of unemployment, inasmuch as worlanen in the
same trade and in the same districts are acquainted with the general movements
and occupations of each other, and it is to their advantage to prevent the receipt
of unemployed benefit by a fraudulent claimant.
All practical experience shows that the labour exchange is of the greatest im-
portance for the establishment of any systems of insurance against unemployment,
and all proposals recognise this. The German Government took one step in the
direction of a solution of the unemployment question, in regard to the statistical
side, viz., by directing a census of the unemployed together with the census of the
working classes in 1895, but accuracy was, of course, not attained.
The total numbers at this census were 299,352 unemployed on 14th April, and
771 005 on 2nd December of the year in question. These numbers formed 0" 58 per
cent, in summer and 1 • 48 per cent, in winter of the total population, and 1 • 35 per
cent, and 3-4:6 per cent, of the working classes.
Although it is recognised in Germany that freedom of movement for workmen
is ensured in connexion with their insurance only if the insurance were an Imperial
institution, it was felt that Imperial insurance against unemployment is, at
any rate at present, practically impossible.
It may be pointed out that in Australia conditions of labour are such that the
greatest possible freedom of movement for the labouring classes must be postulated
in connexion with any scheme, and this would seem to point to the fact that local
insurance could never compete with a Commonwealth method. On the other hand,
it has been recognised by German authorities that it is difficult to see how a Com-
monwealth scheme of unemployment insurance can be made completely satisfactory
in view of all the facts.
Actual experience on the continent of Europe, however, goes to show that
municipal organization has distinct advantages.
The administration of any institution of insurance is much simplified if it is
limited to a well-known and easily-supervised district. Certain difficulties which
oppose the institution of unemplojrment insurance may be more readily overcome
with the municipal than with State organization. Within the municipal boimdaries,
information regarding unemployed individuals may more readily be obtained, and
thus less difficulty will be met with in settling the right of the claim for assistance.
It is also in the immediate interest of the towns to take steps in the solution of this
problem, since this question presents itself each winter and demands sacrifices for
the maintenance of unemployed. That municipal insurance against unemployment
would also touch the chief element of the problem, is confirmed by recent official
statistics showing that the larger towns have the greatest numbers of unemployed.
It has been apprehended that this system of insurance would artificially tend to
concentrate the unemployed at the seats of insurance institutions. But this appre-
hension has been met by a regulation, that only workmen who had been engaged
in work for at least a year in the place may participate in the insurance.
83
6. Summary and Conclusion. — The various schemes referred to in this chapter
may be classified according to five main types, and are shown in the following
tabular statement : —
Unemployment Assisted Instjkanob. — Classbbioation of Systems.
Compulsory
Direct Voluntary
Trade "Union
The Ghent System
The Ghent System
Insurance by
Insurance.
Unemployment
of Subventions to
of Subventions in aid
Municipal Fund.
Benefit.
Trade Unions.
of Individual Saving.
St. Gall
Berne'"
United Kingdom
Ghent!
Ghent§
Leipsigt
Germany
Antwerp!
Bologna§
Baslej
To some extent all
StrasburgI
La Rochelle (since
Colognet
other industrial
Dijon§
1901)§
Venice!
countries
Limoges§
Bologna (to 1901)
Denmarkll
France]]
Norway^
Milaut
• By municipal fund. f By private grants. J By municipal and private grants. § Municipal
•ubvention. ;| National subsidy. U Municipal and national grants.
The question now arises whether it is advisable and practicable for the Common-
wealth to adopt some method of unemployment insurance. Though none of the
systems which have been tried in Europe ofEer a complete solution of the problem
of unemployment insurance, much may be learnt from a study of the efforts which
have been made. Though these efforts must be regarded as faulty, it is not desired
to give the impression that such municipal institutions cannot serve a useful purpose.
On the contrary, they have been of great value, and though not based on scientific
principles, they have afforded a species of " assisted insurance " far preferable to
the old methods of indiscriminate and uncertain relief. The principle of registration,
the fact that the workman is contributing regular premiums, and that he has a legal
right to imemployment allowances, are the valuable features of these systems. The
unemployed are brought under the supervision of the municipal authorities, and
are assisted in finding work, and workmen are required to make some personal
sacrifice before they are entitled to relief, which can only be obtained by bond fide
residents.
At the present time there exist no suffi.cient data, relating to AustraUan experience
of unemployment, to indicate what the efiects of any such system would be. The
necessary information on which to found any proposals for practically dealing with
this question could be obtained by proper inquiry.
It should be observed that any scheme for AustraUa must devise some means
of reaching those classes not possessing labour organizations, if it is to fulfil its
normal functions. There is no reason why the organized trades should not them-
selves develop systems of unemployment allowances, and there is ample warrant
for giving national State encouragement to such development. A most important
part of any system would be in rendering assistance (through efiicient labour
exchanges) to the unemployed in finding work.
Finally, it remains to be said that all social insurance, and particularly that
against unemployment, can hope to succeed only if a higher degree of total industria
efiiciency can be secured thereby. If the alleviation of the load of trouble should
result in relaxing in any measure strenuousness of effort on the part of workmen,
then the schemes of social insurance are foredoomed. Not only so, but what might
have been singularly helpful in creating a healthy social solidarity by reinforcing
the energies and favorably influencing the destiny of the nation, can on the other
hand assuredly bring about its doom.
84
CHAPTER XI.— THE POLICY OF SOCIAL INSURANCE IN AUSTRALIA.
Section 1. — Existing Institutions.
1. General. — Before proceeding to give any outliae of a policy of social insurance
for Australia, it will be profitable to indicate briefly the nature of existing institutions
and to consider the position of these institutions in connexion with the adoption
of a national pohcy of social insurance.
The provision made in AustraUa against the risks of sickness, accident, invalidity,
unemployment, and death (involving funeral and other expenses and subjecting
dependents to privation) is at present fragmentary, and is also entirely voluntary.
The principal organizations engaged in providing relief are as follow : — (a) Friendly
societies ; (6) accident assurance companies ; (c) the Commonwealth old-age pension
scheme ; (d) hfe assurance companies ; (e) staff, and other pensions.
2. Friendly Societies. — These are the chief organizations for sickness insurance,
and comprise local mutual benefit societies, lodges of trade unions, and fraternal
societies. They provide for their members medical attendance, medicine, and sick
pay in the case of sickness and accident, and a sufficient sum to cover funeral and
incidental expenses ui case of death. Many of these agencies are not founded
upon any strictly scientific actuarial basis, and central direction and supervision by
the State is unknown (excepting in so far as the approval of rates and rules by the
Registrars of Friendly Societies is concerned). They are often conducted at large
expense relative to receipts, and, however well they may be individually managed,
as a system they at present constitute by themselves a crude, inadequate, and
wasteful method of supplying a great .social need. Furthermore, it should be noted
that friendly societies, in common with aU other voluntary organizations, suffer
from the defect that they are patronized chiefly by the more thrifty classes only,
and that they do not therefore reach those whose economic position is the most
hopeless.
In all the States of the Commonwealth provision has been made for the voluntary
registration of friendly societies and for conferring on the societies so registered
certain privileges with regard to exemption from taxation and other matters. On
the other hand, every registered society is required to submit, for the' approval of
the Registrar, its rules and rates of contributions and benefit, as welT as to furnish
annual returns respecting its membership and finances. According to the latest
available returns the nimiber of registered friendly society branches in the Common-
wealth is 4,150, with about 375,000 members. As the benefits conferred are
ordinarily extended to each member's wife and family (if any), probably not less
than 1,500,000 persons, or about one-third of the total population of Australia, are
in receipt of benefits from these institutions. The annual revenue of the registered
societies is about £1,410,000, and the expenditure about £1,140,000, while the
accumulated funds amount to £4,600,000 approximately. The work which these
societies carry on in the field of social insurance has attained such dimensions that
any proposal to introduce in the Commonwealth a comprehensive scheme of com-
pulsory insurance would have to give due consideration to these institutions, and
should, if practicable, be so arranged as to work in conjunction with them.
Certain trade unions in Austraha ofier benefits somewhat similar to those of
friendly societies, though that is not the main object for which they were created.
The criticisms which apply to friendly societies are applicable to these also, but the
defects in them, from the scientific point of view of social insurance, are even greater.
It may possibly be found that the attitude of the friendly societies and trade
unions wiU initially be hostile to a proposal for any legislation which may affect their
growth or prosperity, even though such kgislation, based on scientific, economic
principles, may fill a great social need, and more effectively deal with those form*
85
of social iasiu-ance for which they provide. Such an attitude towards State insurance
would, however, be extremely short-sighted, for any modification of these institutions
necessary to bring them into line with a national scheme of social insurance, would
ultimately prove the reverse of inimical to their interests. Beyond doubt, a well-
designed system of workmen's insurance, modelled perhaps upon that of Germany,
would do much for the wage-earner for the reasons referred to elsewhere, and the
probability is that such a system when once properly presented and clearly explained
to the members of friendly societies and trade unions would soon win their favour.
Even at present the tendency is for the State to carry its regulation of friendly
societies further and further ; to make them more uniform, both as regards their
organization and operations ; and thus bring them under a general system.
3. Accident Insurance Companies. — These companies issue pohcies securing to
the holder certain benefits in the event of accidental death or disablement, as well
as, in some cases, in the event of the contraction of certain specified diseases.
Accident insurance business has not, however, yet attained to any considerable
dimensions in the Commonwealth, and, moreover, it is not concerned to any
appreciable extent with the direct insurance of the working classes. The companies
referred to also insure against the risk which devolves upon employers in connexion
with their workmen either in respect of their common law obligations or under
special enactments. Such insurance is not " social insurance " in the sense indicated
herein.
Even if the operations of existing companies should be somewhat restricted by
the institution of State insurance, this could hardly be regarded as a sound objection
to the ultimate institution of compulsory insurance, if the latter be deemed to be
imquaUfiedly desirable. From the stand- point of pubUc policy existing companies
or institutions do not exist solely for their own sake, but for the sake of the com-
bination of policy-holders represented by them. If the transition be so arranged
as to cover a considerable period of time the grave difficulties and serious wrongs
resulting from instant change could be largely avoided, though naturally some
degree of individual hardship must be associated with the introduction of a new
system of things.
4. The Commonwealth Old-age Pensions Scheme. — This scheme, under which
pensions have been paid since the 1st July, 1909, provides relief in the case of old
age and also contemplates similar relief in the case of invalidity. The necessary
machinery is provided for by the Invalid and Old-age Pensions Act 1908. The
proclamation necessary for the payment of invahd pensions has not yet been made.
This law must be regarded as a social experiment, the success or otherwise of
which has yet to be shown by experience. Its social and economic effects, both
near and remote, are problematical, and it is not probable that they will be revealed
even partially for several years to come. The full consequences will require at
least a generation to show themselves. The most obvious criticism to be made upon
this legislation is that it is empirical and that it treats the problem of old-age
poverty superficially rather than scientifically. Unquestionably it provides reUef
for the aged pauper of to-day ; but the question may well be asked how far the
discipline of thrift should be reinforced by requiring, from the physically able,
compulsory contribution to this scheme. In other words, should the pension be
met out of general revenue, or should the individual be compelled to directly con-
tribute to his insurance against old age. It must, at any rate, be agreed that old-
age poverty is largely the result of an economic or industrial system which is at
fault somewhere, and whether the wage-earner reaches old-age poverty through
his own fault or that of society, the correction should come through radical legislation,,
based upon sound economic principles, scientifically studied.
86
Under the existing system the inquiries into the merits of applicants must neces-
sarily be inquisitorial, and the amount of the pension (subject to certain limits)
and the age at -which it may be granted are both arbitrarily fixed by the Act. The
amounts of compensation, however, to which wage-earners may be entitled, as a
matter of justice, for years of ill-requited toil must be subject to considerable
variations, whUe invahdity or old age may be brought on prematurely by the
nature of the occupation, by accident, or in other ways.
From the moral stand-point, a community is prejudiced by any pension system
which is, whether rightly or wrongly, popularly regarded as a form of charitable
rehef, and not as an individual right arising out of participation in a compulsory
system, by contribution either direct or through general taxation.
5. Life Assurance Com-panies. — These companies provide by industrial assurance
pohcies for payments at death, and also to some extent make provision for old age
by means of endowment assurances and deferred annuities. The money secured
by industrial assurance policies is mainly intended to provide for the expenses con-
nected with the last illness and the funeral expenses of the insured, and the amount
payable is usually so small that, after defraying these expenses, little remains for
dependents. In so far as these companies are voluntarily institutions they are
characterized by the same defects as friendly societies (see para. 2 hereof). It is
open to doubt whether the business of these companies would be prejudicially
affected by the introduction of a State system of insurance, but it appears not
improbable that their business would continue as supplemental to the insurance
provided by the State. It is claimed, for example, that insurance companies are
not at aU afiected by the existing old-age pension law, and it would thus appear that,
so far, the spirit of self-help and thrift has not thereby been weakened. The alleged
objection to compulsory insurance, because of any injury which may be caused to
existing companies has abeady been dealt with [see para. 3 hereof), and it may
here be pointed out that in Germany it has been found that the compulsory system
does not render other forms of insurance provision superfluous, since it simply has
regard to the bare necessities of existence ; it does not remove the motive for
investing in extra insurance in life assurance companies, nor for forming trade
unions and friendly societies, nor for savings banks. All these organizations of
thrift still flourish in that country.
6. Staff and Pension Funds. — These funds provide for certain of the risks re-
ferred to ; they vary considerably in their provisions, and are mainly associated
with the public service, associations of ministers of religion and school teachers,
and the larger commercial or financial institutions. The existence of the funds,
which provide for a very small proportion of the population, emphasizes the need for
some general system of insurance. It is obvious that the conditions of State service
demand that the State should determine the conditions of its employes so that their
service can be hearty and single-eyed. But there is really no reason why the State
should show less solicitude for the great mass of wage-earners, upon whom the
national prosperity fundamentally depends. Hence, if the solidarity be recognised,
the duty fellows.
7. Insurance against Vnowployment. — No provision for insuring workmen against
the risk of loss arising through unemployment has yet been put in force in Australia,
except in so far as allowance may be made from the funds of trade unions and
similar organizations. It is known that at least one of these organizations is
seeking to establish a regular unemployment insurance scheme.
8. Future Developments. — In surveying the field of existing institutions, then,
we see that Austraha has no coherent system of social insurance, but that a beginning
has been made from various starting points. We find a heterogenous group of
87
agencies all acting individuaUstically, seeking to accomplish one or more of the ends
desired, and these prove the urgent social need for such provision as will give some
greater d.egree of contentment and some sense of security for the future. But while
existing institutions furnish conclusive evidence of the need, a study of them dis-
closes the fact that no one of them nor any of them combined are adequate or even
appropriate for the full satisfaction of the need. An enhghtened State to-day
must be conceived as ready for somethiag better than the existing organization,
and out of fragmentary and inadequate institutions, the Commonwealth has yet
to develop a consistent, comprehensive, and worthy policy of social insurance.
Section 2. — Benefits of Social Insurance.
1. General. — In Germany, it was recognised that legislation as to social insurance
rested upon the principle of social duty to the working classes, this being part of a
primal duty of conserving to the full the well-being of the entire State, and that
such legislation was therefore independent of parties. This unity of purpose
was attained, in spite of early misgivings and antagonisms, because of the far-
reaching and manifest advantages of the system, a system which it may be said has
furnished .a revel9,tion as to the possibilities of scientific, beneficent, social legis-
lation. It has endured the criticism and scrutiny of observers, and, after a trial
through nearly a generation, has gained their approval. The plan has commended
itself not only to the German nation, but to increasing numbers of all enlightened
people, and the unanimous judgment is that it has produced a deep and lasting
effect upon the moral and material welfare of the German Empire. It is probably
in no inconsiderable degree responsible for the present efficiency and power of that
Empire. Some of the advantages and benefits of the system may be briefly sum-
marized (see paras. 2-6 hereinafter).
2. Improved Processes and Appliances. — In the first place, the cost of accident
insurance premiums makes it to the direct and manifest interest of employers to
utiUze protective devices to prevent injuries. Research and invention in the direc-
tion of safety appliances are stimulated by prizes. Regulations are issued and
inspectors appointed to insure that proper precautions are taken in dangerous
trades. Improvements are made in the hygienic conditions and structural arrange-
ments of factories, and officials concern themselves with such matters as cleanUness
and the changing of clothes, with intemperance, long working hours, excessive
exertion, and protracted work in certain attitudes as bearing upon the fitness of
men to work given hours in particular industries.
3. Improved Treatment and Hygiene. — The admuiistration of the sicloiess and
invalid funds takes care to provide means for the speedy and effective cure of
invalids. It became evident that the problem was to endeavour to minimize
sickness and accidents — to prevent rather than to cure. In the interests of the sick
and injured, speciaKsts are consulted and the most recent discoveries in medical
science are used ; the services of highly-trained physicians, surgeons, and nurses
are called into requisition ; hospitals, sanatoria, and convalescent homes, with their
necessary staffs, have been established in the country and at the seaside. There is
a general dissemination of knowledge on important matters of health ; lectures and
instruction are given as to principles of hygiene ; and literature is distributed for
the purpose of affording instruction and information. The whole educational
influence of the instirance system is thus directed to diminish the frequency of sick-
ness and accidents, to combat preventible diseases, and to improve the conditions
and habitations of the wage-earners and their families. In short, the ideal of
medicine, viz., to secure a good prophylaxis, is found to be moving towards reahzation.
All this is the inevitable result of compulsory insurance in any country where
Bcienti&c direction characterizes an administration, and where the general level
88
of appreciation of systematized knowledge and research is high. These results
could not in anything hke the same degree arise under a voluntary system dependent
on individual caprice, and without the guidance of a legislation and a development
of science which reflect the highest reaches of the national intelligence.
4. Increased Efficiency of Workmen. — Since one of the prime factors in production
is the healthy and efficient workman, expenditure on sound social insurance may
he regarded as a wise investment, and one which wiU return to a nation a high rate
of interest, notwithstanding that national systems of book-keeping, as at present
organized, will not immediately disclose this fact. The claim that the health and
efficiency of the workman can be thus increased may, to a superficial observer,
appear fanciful, but the progress of one of the greatest European nations afiords an
illustration of the vaHdity of this claim. It rests on the fact that the condition of
physical energy, of freedom from worrying and depressing despair in prospect of
temporary or permanent incapacity to earn a living, of comparative ease and peace-
fulness of mind, is an asset of the first importance in the process of continuous
manufacture. Other things being equal, the workman who has suitable con-
ditions of life is thereby rendered more efficient ; he not only loses less time and
money in various ways, but is actually more fully engaged in the production of
wealth, with all its favorable consequences both to himself and to his nation. It
is obvious, too, that workmen, under such conditions, five better and have more
varied wants, being thus at once both prime factors in large production and in the
creation of national markets.
5. Beneficent Moral Effect. — -Beyond all material considerations, the beneficent
moral effect of the system in Germany has been enormous, and a direct and far-
reaching result is that the spirit of thrift, manhness, and self-reUance has been
reinforced in the working classes. In that country the insurance laws encourage
and stimulate the interest of both employers and employes in the system, a system
administered on the principles of mutual benefit and self-government under the
regulation of law. In this administration the workingmen are recognised as free
agents and inteUigent participants in the afiairs of the country. There is no
suggestion of charity, since each workman contributes his share, has a voice in the
control, and can set up a legal claim when he requires benefits. The workman
realizes that he, personally, is making provision for his own future, and does not
hope to profit by exploiting some one else. The system is self-respecting ; it brings
with it courage, hope, and contentment. The committees of administration bring
employers and workmen together under conditions favorable to social conciUation,
and this has, in a conspicuous degree, contributed to better feeling and has mini-
mized friction between classes. A further advantage of the system is that the
State provides a simple and inexpensive arrangement for hearing cases and settling
disputes impartially. In every direction the system seems to have promoted
civilization and the common welfare.
6. General Prosperity. — The years of trial of the system in Germany have
coincided with the period during which there has been marked progress in commer-
cial and industrial prosperity, a progress almost without parallel in modern history.
The nation has grown rich and the workmen have vastly improved their general
weU-being and their indiwtrial efficiency. These facts no doubt are not related
as sole cause and effect, although it is the claim of competent observers, that the
national progress has been materially promoted by the regime described. What
is clear is that in any case a supposition that the system must necessarily be a burden
upon the capital, industry, and commerce of the nation is refuted. The expectations
of those who looked beneath the surface of economic phenomena have been more
than reahzed, and their hopeful view has prevailed over the predictions of disaster.
It is proper here to observe that these excellent results will be achieved only if
89
the spirit of strenuousness is maintained at a high level. If, as a result of the
system of social insurance, there should arise any general relaxation of eSort, the
consequences on the national destiny would be the reverse of favorable. The
danger indicated is more hkely to supervene in a non-contributory system, and it
may be further remarked that for the general prosperity to be favorably afiected
the vigorous elements of national hfe must be independently maintained.
Further proof of the beneficent eSect of the German system is furnished by the
fact that to-day it commands practically universal approval of the workmen.
While it is recognised that there are defects in detail, it is also beheved that these will
gradually be corrected ; methods will be unified and simplified ; and in the near
future the benefits will include larger pensions to widows and orphans, and probably
some form of protection to the temporarily unemployed.
Section 3. — Survey and Outlook.
1. General. — In the preceding parts of this report an examination has been made
of the various lands of workman's insurance and of the chief methods by which
its provision has been accomplished in difEerent countries ; it now remains to briefly
review the whole field, especially in connexion with certain important considerations,
and to indicate some of the ways in which the experience of other countries can be
of assistance in any attempt which may be made in the Commonwealth to further
similar movements. It is not proposed to refer further to the problem of unemploy-
ment insurance ; that matter has been dealt with in the preceding chapter hereof.
2. The Desirability of State Insurance. — Assuming the need for social insurance
through some agency, private or pubhc, the grounds for State insurance would
seem to be very strong. It has already been pointed out that the suggestion for
State insurance was agitated many years ago in certain European countries, and
that at the present time, even in those civihzed countries in which social insurance
has not yet been developed, there is a distinct tendency towards a more and more
stringent supervision of insurance matters by the State. If, therefore, it be objected
that State insurance would be sociahstic and unduly paternal, it must be remem-
bered (a) that all insurance is in its very nature socialistic ; and (6) that the paternal
attitude in the matter of insurance has already been adopted by nearly every
civilized State in its assumption of supervision and control. Hence in the institution
of a system of State social insurance it is proposed either to replace existing insti-
tutions by, or to develop them into, something, not indeed more paternal, but more
just and efficient ; to re-adjust certain relations between class and class ; and to
provide for a great social need on more scientific and better ethical foundations.
If freed from the prevailing circumlocutory methods, a State institution would
have manifest advantages over those privately organized and managed, (a) In
the first place, it could ofier security impossible to be obtained by a private corpora-
tion, and this security could be attained without the accumulation of any reserve.
The State must endure through all ordinary vicissitudes in political and financial
afEairs. (6) Secondly, the State, subject to the same proviso, could provide insurance
at a minimum cost, being able to gain the attention of workingmen without the
expenses of agents' commissions, advertising, fees, &c. Further, a Government
institution does not require to make profits, (c) Thirdly, the actuarial questions
involved in a scientific system of social insurance ,are difficult and intricate, and
require the mathematical analysis of comphcated statistics. These statistics the
State is best qualified to procure with economy and accuracy, and to prepare
reliable tables of mortahty, morbidity, and accident-frequency. Aheady the
Commonwealth is partially equipped for such work, and procures for other purposes
some of the data required. With the exercise of the full powers conferred by the
Constitution Act in respect of statistics, and a careful determination of the scope
of the data required, all other necessary particulars could readily be collected.
90
(d) Fourthly, the workman requires to have the minimum cost of insurance authori-
tatively stated. The individual knows but little of the actual risks which assail
him or of what the proper cost of insurance against any class of risks would be.
No other agency or source of information could command as great confidence as a
properly organized State bureau, (e) Fifthly, State insurance affords faciUties
for the collective insurance of workmen by the erdployers. For example, it is
difficult for any but the largest employers of labour to attempt to create a system
for insurance against accidents ; the State, therefore, ofiers to small employers an
institution conducted on the most economical and scientific hues, and in which
all the necessary arrangements for management and abstruse actuarial calculations
have already been made. (/) One of the greatest advantages offered by the State
institutions is the facility afforded for the organization of compulsory social
insurance. This matter is further dealt with in the following paragraph.
3. Compulsory Insurance. — Having shown, firstly (see Sec. 1 of this chapter), that
a great need for a system of social insurance exists in the Commonwealth ; secondly
(see Sec. 2), that great benefits are reasonably to be expected from such a system ;
and, thirdly {see para. 2 hereof), that State social insurance is preferable to insurance
by private organizations, the question now arises whether the system should be
voluntary or compulsory. This matter has already been referred to en passant on
several occasions, and the development of the compulsory principle has been
dealt with in Chapter I. hereof.
That a system based on compulsory membership is necessary to bring the benefits
of insurance within the reach of those who most need them is evident by the fact
that Germany, before 1883, had developed its voluntary associations for sick
benefits to a remarkable extent, and yet scarcely half those who were in need had
any share in the system. Since the Act of 1883, all wage-earners are protected.
So long as any system is entirely voluntary it will be evaded by the class of
employes who most need insurance, and will show the same defects which make
all existing institutions unsatisfactory (see Sec. 2 hereof). A sound system of social
insurance cannot be made effectual and general in its apphcation without com-
pidsion. The State should certainly not invoke compulsion for trivial reasons, but
when national destiny and large interests concerning the welfare of the majority
of the population are involved and a desired end can be attained only through
compulsion, the State has no ground for hesitation.
No system of saving or of insurance can, of course, do much to benefit directly
the non-industrial classes, such as paupers, criminals, vagabonds, idiots, and insane
persons. Social insurance affects immediately only workmen — those who spend
most of their hves earning a Uving wage. For defectives and paupers, workmen's
insurance is inappUcable, and these persons must still be either supported by public
or private charity, or be made, through a well-directed system of industrial education
and activity, to provide wholly or partially for their own support. Experience has
shown that, in general, the industrial activity of defectives can be made economically
satisfactory, and eugenists have made proposals for better methods of dealing with
the criminal classes.
It may here be remarked that the word " compulsory " as appUed to legislation
is perhaps ill-chosen, since the idea of compulsion is an odious one. When, however,
a law is the expression of a dehberate social pohoy accepted by the people, it is
more properly an act of voluntary social co-operation on the part of the commimity,
rather than a compulsory one, except in name. The compulsion is necessary to
safeguard the community against the selfishness or ignorance of exceptional indi-
viduals. Just as the normal citizen is unconscious of any restraint in the laws
against crime and disorder, and does not resent as " compulsory " taxation for
pubhc services or sanitary and hygienic regulations, seeing that he views these
matters as the beneficent results of an enlightened State, so also will he regard social
91
insurance as equally demanded by an intelligent conception of free citizenship.
It is merely an establishment of uniformity of action for the common good. In
Germany and other European countries the " compulsory " insurance laws are
recognised by intelligent critics as being in no way oppressive, injurious, or excessively
costly.
4. Incidence and Cost. — A complete answer to the question whether universal
State social insurance is an economic possibility would require lengthy discussion. It
would, primd facie, appear, however, that the profits of the employers in a country
like Australia could reasonably be expected to bear a considerable share of the
burden. Here the employers are, generally speaking, extremely prosperous, and
often subscribe large sums directly and indirectly to help workmen in times of
incapacity for work. These sums include contributions to special funds and
hospitals, gifts to people in distress, subscriptions to various charitable institutions,
and, in part, general taxation. Judging by the immense sums spent by workmen
and others on various objects the national value of which is questionable, the
wages could also carry a fairly heavy load for social insurance pm'poses. There are,
however, numbers of employes whose wages do not now suffice to pay for the
bare necessaries of healthy life. Yet there are probably few, even of these, who
do not on an average spend at least the amount of the premiimis on luxuries with
which they could well dispense. The question is merely one of the standard of
duties recognised, and not one of amount of income. The principle that the " living
wage " should include the necessary weekly payments for accident relief and hospital
funds has been laid down by the Commonwealth Court of Conciliation and Arbitra-
tion, and, ultimately, no doubt, wages will be adjusted where necessary to fulfil
the required conditions.
Whether, in the aggregate, the total amounts of premiums or assessments paid
under a system of social insurance would exceed the total burden now borne by the
community on account of its needy, sick, or unfortunate members must be a matter
of speculation. It would, however, not be too optimistic to expect that under
a scientific system of social insurance there would be considerable economy compared
with present admittedly wasteful methods. In this connexion, it is well to note
that due consideration of the whole question requires that, against the total cost,
must be set ofi the monetary value of the benefits conferred by the entire system,
viz., the benefits already referred to in section 2 hereof.
5. Organization. — Since the different branches of social insurance are in certain
respects essentially difierent in character, they require different measures to meet
the special features of each. The result is that experience has shown that it is
desirable to provide an independent organization for each branch. This means
that the accounts dealing with contributions and expenditures of each must be
kept quite distinct, though the general administration may still be kept under one
department. The chief reason for this policy is that a difierent principle must be
adopted in each branch with respect to the extent to which administration must be
centralized in general institutions or decentralized in more or less independent
local societies. In invahdity and old-age insurance, as well as in accident insurance,
provision must be made for the payment of pensions, and the risks, therefore,
must be calculated for many years ia advance — this can, of course, only be done
efficiently when comparatively large numbers are insured in permanent organiza-
tions. In the case of sickness insurance there is no such necessity, while malingering
and simulation (which may also occur to some extent in accident insurance) can be
efficiently kept in check only by having small local societies.
In general, therefore, it 'appears that invalidity and old-age insurance requires
the greatest degree of centralization, then accident insurance, while sickness
92
insurance stould be carried on, as far as possible, through small independent local
organizations. These elementary principles have been recognised in all countries
in which a system of compulsory insurance has been adopted or proposed.
An important matter in organization is that concerning the financial arrange-
ments for the payment of benefits. The differences in the various systems have
already been discussed (see Chapter I., Sec. 2, para. 5).
6. General Policy. — In terminating this report, though it is contrary to the
purpose thereof to pass final judgment as to the superiority of any particular system,
it will be useful to outline in general terms the pohcy which it is beheved should
be followed in the event of the adoption of social insurance in the Commonwealth.
The first step would be the education of the people concerning the nature and
efiects of social insurance. Attention should be drawn to the present economic
insecurity of the wage-earner, and the fundamental principles of social insurance should
be clearly explained. Employers and employes alike should be made to recognise
the difference between scientific insurance and general assistance or charity ; the
necessity for providing different organizations for each branch of social insurance ;
and generally, the desirability of making provision against the various risks on a
proper basis. The benefits of social insurance should be explained and contrasted
with the existing condition of affairs. At first, emphasis should be placed upon the
development of sickness and accident insurance ; then attention should be drawn
to insurance against invalidity and old-age, and finally the question of the reUef
or diminution of unemployment could be considered.
Concurrently with this educational efiort, it would be necessary to coUect the
statistics and perform the actuarial work necessary for the proposed system. In
order to make the necessary calculations, statistical data covering a period of a few
years and relating to a number of different classes of facts would be required, and
would be collected by a centralized agency for the whole Commonwealth. Tables
of mortahty, morbidity, and invalidity, and tariffs of risks would be prepared and
published. Possibly material help could be furnished by an examination -of the
records for past years of friendly societies and other institutions. The tables and
tariffs would probably at first be somewhat tentative, but would no doubt gradually
attain a high degree of precision.
Tables and tariffs compiled on the experience of other countries would be of
some value in Austraha, but it is clear that the experience of one country would not
serve as the basis for another, unless there existed a marked similarity in the two
coimtries in the distribution of occupations, rates of emolmnent, the conditions of
employment, the general health of the community, and the hygienic, climatic, and
other conditions.
As regards the actual system to be adopted, it would perhaps f oUow, in its general
scheme, the German law. The difficulties in creating ah initio a general system to
comprise all classes of employes in Australia would probably be very great ; the
preferable line of action would be to confine the system primarily only to a certain
class or certain classes of employes {e.g., railway employes, miners, &c). With
the experience thus gained, the work of extending the system to other classes could
be pursued with far greater certainty and ease. It cannot be too strongly urged
that if the whole matter is not to fall into unmerited disrepute through ignorant
direction every step must be taken with caution and oidy after a genuine and
systematic study of the question.
To create the machinery required it would be necessary to constitute by statute
an insurance department with commissioner and staff. In this connection it
may be mentioned that it has already been recommended that a Federal
Commissioner of Insurance should be appointed in connection with Life Assurance.
(See Eeport of the Royal Commission on Insurance, Part I., Life Insurance, page
38, para. 4). The Act should indicate those persons for whom insurance
;j93
is made compulsory ; it should define the character of the risks insured against
and the amount of insurance to be carried; it should fix a tarifi of
premiums and the mode of payment ; it should specify in detail the conditions
under which benefits will be paid, the amounts of sickness and accident pay,
the amounts of annuities, the age at which old-age pensions are to commence, and
the conditions constituting invalidity. The Act should also prescribe the condi-
tions under which medical and surgical attendance may be rendered, and should
provide for the construction and equipment of hospitals and sanatoria. It might
direct that the employer should pay the employes' proportion of the insurance
charges by deductions from wages. It could permit insurance through existing
organizations, but prescribe that it should be efiected through the State, unless
equivalent provision (subject to the approval of the insurance commissioner) had
been made elsewhere.
If some such system were adopted in AustraUa, even for a very limited class of
employes at the outset, it would provide an institution in which individual workmen
in other industries could insure themselves against the risks specified ; it would
enable small employers to efficiently insure their employes ; and could not fail to
•exercise an important influence in disseminating correct ideas of the principles of
social insurance and in providing means for its accomphshment.
To hope to bring a supremely difficult matter of this kind to a successful issue,
it will be necessary to develop its details on the results of an exhaustive study.
This is a characteristic method in Europe and particularly in Germany. There the
project for any law on a subject of this kind is the result of an exhaustive analysis
of aU available experience and of a consideration of all the features of local applica'^
tion. All direction, besides being scientifically or technically well-informed, is
efiected in the hght of such experience as the world can contribute to the matter
at issue, and the projects for laws are often so perfectly framed that not infrequently
they are placed on the Statutes exactly as drawn. The consequence of this is
that the efficiency of the study of experience under any Act is greatly enhanced
and progressive legislation is better directed.
The problem of social insurance is too far reaching in its consequences to be
profitably handled by any one giving it either a dilettante or a merely academic
•consideration, and its successful solution will require the undivided attention of a
well-informed mind.
95
APPENDIX A.
BIBLIOGRAPHY.
Actes du VIII. Oongria International des Assurances Sociales. Vols. I., II., and III. Bertero
et Cie. Borne, 1909.
Alden and Hayward. The Unemployable and Unemployed. Headley Bros. London, 1908.
Beitrdge zur Arheiterstatistik. Nos. 1, 2, 6, and 7. C. He3rmann. Berlin, 1904^1908.
Bericht iiber den I. Internationakn Konqress fur das Bettunqswesen. Vols. I. and II. Berlin,
1909.
Beveridge, W. H. Unemployment — ^A Problem of Industry. Longmans, Green. London, 1909.
Chapman and Hallsworth. Unemployment in Lancashire. University Press, Manchester, 1909.
Bulletin des Assurances Sociales (E. Puster). Nos. 3 and 4. Paris, 1909.
Congres International des Accidents du Travail et des Assurances Sociales. Vols. I. and 11. Milan,
1895.
Congres International des Accidents du Travail et des Assurances Sociales. Brussels, 1897.
Congres International des Accidents du Travail et des Assurances Sociales. Vols. I. and II. Paris,
1901.
Congres International des Accidents du Travail et des Assurances Sociales. Dusseldorf, 1902.
Congres International des Accidents du Travail et des Assurances Sociales. Vols. I. and II.
Vienna, 1906.
Dawson, W. H. The German Workman. P. S. King and Sou. Westminster, 1906.
Entwurf einer Beichsversicherungsordnung. C. Heymann. Berlin, 1909.
Farrell, J. Insurance against Unemployment. Actuarial Society of New South Wales. 1909.
Foot, A. The Practice of Insurance against Accidents and Employers' Liabihty. 2nd ed.
Smith and Ebbs. London, 1908.
German Law of 1900 on Sickness and Old-age Pensions. Diplomatic and Consular Reports,
No. 518. Miscellaneous Series. Harrison and Sons. 1899.
Handworterhuch der Staatswissenschaften. Vols. I. and II. G. Fischer. Jena, 1908.
Henderson, C. B. Industrial Insurance in the United States. Chicago University Press, 1909.
V Assurance des Employis et des Travailleurs independants par Maurice Bellom. Comity perm.
intemat. des Assurances Sociales. Sept., 1910.
Le Comity Permanent Internationale des Assurances Sociales. Paris, 1910.
Lewis, F. W. State Insurance. Houghton Mifflin Co., Boston and New York, 1909.
Manes, Prof. A. Versicherungs-Lexikon. Mohr, Tiibingen, 1909.
Monatsbldtter fur Arheiterversicherung. Berlin, 1909-10.
Proposition de Loi sur les Betraites ouvrikres et paysannes. Adoptde par la Chambre de D6put6s.
Imprimerie du S6nat. Paris, 1910.
Schloss, 0. F. Insurance against Unemployment. P. S. King, London, 1909.
Sellers, E. Compulsory Insurance against Unemployment : a Swiss Scheme. Nineteenth
Century, No. 399. May, 1910.]
Siefart, H. Der Begriff der Erwerbsunfahigkeit auf dem Gebiete des Versicherungswesens.
Behrend and Co. BerUn, 1908.
Soziale Kultur. Gladbach, Volksverein-Verlag. Berlin, 1910.
Statistik der Heilhehandlung, 1903-1907. Behrend and Co. Berlin, 1908.
Varley, L. Rapport Des Moyens d'6tendre I'action du Ponds de Chomage. Gand, 1910.
Varley, L. Die Bekampfung der unfreiwiUigen Arbeitslosigkeit. Berlin, 1910.
Willoughby, W. F. Workingmen's Insurance, 1898.
Workmen's Insurance and Benefit Funds in the U.S. 23rd Annual Report of the Commissioner
of Labour. Government Printing Office, Washington, 1909.
Versicherung gegen die Folgen der Arbeitslosigkeit im Ausland und im Deutschen Beich. K.
Statist. Amt., 1906. 691 pp. + 468 pp., 4to.
96
APPEN
SICKNESS
Country.
1. Germany
2. Austria
3. Hungary
4. Italy
Nature of Systems ia
Force, and Dates of
Principal Acts.
Compulsory — Acts
of 1883 and 1892
Voluntary
Compulsory
Voluntary — Act of
1888
Compulsory — Acts
of 1891 and 1907
Voluntary
Voluntary — Act of
1886 (compulsory
insurance pro-
Scope of Systems.
6. Knland
6. Holland
7. Norway
8. Sweden
9. France
10. Belgium
11. Great Britain
Voluntary — Act of
1897 (compulsory
insurance pro
posed)
Voluntary — Act of
1901 (compulsory
insurance pro-
Voluntary (compul-
sory insurance
proposed)
Voluntary — Act of
1891
Voluntary — ^Acts of
1850 and 1898
Compulsory — Act of
1894
Voluntary — Acts of
1851 and 1894
Voluntary
For workmen and employfe in
trades and commercf , if their
annual earnings do not exceed
£100 ; may be extended by
special regulations to agricul-
tural and home industries
By special regulations for per
sons not coming under com-
pulsory provisions, if annual
earnings do not exceed £100
In 1906 there were 11,690,000
persons insured
For workmen in trades
For employes in agricultural
and home industries, and for
small employers
In 1905 there were 2,840,000
persons insured
For workmen in trades, if their
annual earnings do not exceed
£100
For employes in agricultural,
forestal, home, and other in-
dustries
In 1906 there were 850,000
persons insured
For wage-earners in all occupa-
tions
In 1905 the total number of
members of funds and
societies was 953,000
Same as in Italy
In 1906 there were 43,000 per-
sons insured
Same as in Italy ' . .
Same as in Italy
Same as in Italy
Same as in Italy
For miners up to £100 annual
wages
Same as in Italy
Same as in Italy
Methods of
Organization.
Local sickness funds
based on the prin-
ciples of mutual
help and self-go-
vernment under
the general law ;
also free sickness
associations
Same as in][Germany
National fimd, with
local territorial
and factory
branches
Registered insurance
funds with legal
privileges ; free
mutual aid or
friendly societies
Same as in Italy . .
Free associations . .
Free or registered
mutual benefit
trade associationa
Same as in Italy . .
Same as in Italy . .
Sickness funds
Same as in Italy . .
Same as in Italy
(trade unions and
friendly societies)
DIX B.
97
INSURANCE.
Total Amount of
Premiums payable per
Employ^ per Annum.
rrom 1 to 4 per cent,
of wages, in different
funds according to
the scale of relief
given. Average pre-
mium per person in-
sured in 1906 was
£1 4s., and the
total contributions
£13,833,000
Not exceeding 3 per
cent, of wages. In
1905 the average
premium paid per
person insured was
17s. 5d., the total
amount of premiums
being £2,350,000
Not exceeding 3 per
cent, of wages. In
1906 the average
premium paid per
person insured was
133. The total
amount of premiums
received was
£550,000
Varies in different
funds — no statutory
percentage. In 1905
the average per per-
son insured was
73. 6d., the total pre-
mium revenue being
£352,000
Varies according to
rules. In 1906 the
average was 8s. 6d.,
the total premiums
- being £18,300
Varies ; average 6s. 3d.
in 1905
Varies ; average 7s. 9d.
in 1907
Varies from 73. to 9s.
Varies; average 12s. 6d.
3 per cent, of wages
Varies ; average 8s. . .
Varies
Method of Contribution
of
Premiums.
One-third paid by em-
ployers ; two-thii'ds
by workmen
Same as in Germany . .
Half by employers and
half by workmen
Whole premium, pay-
able by workmen ;
State subsidies for
sickness and death
benefits, but not for
medical treatment
Same as in Italy
Whole payable by
workmen
Same as in Italy
Same as in Italy
Same as in Italy
Same as in Germany,
with State subsidy
Same as in Italy
Same as in Holland . .
Benefits afiorded.
(o) Free treatment and sick-pay (50 per cent,
of average wages) for 26 weeks ; or free
treatment in hospital and half sick-pay to
dependent relations for same period.
(6) Lying-in women receive at same rate for
six weeks.
(c) Death benefit of twenty times the daily
By special rules the funds may increase this
minimum scale of benefits. The total
expenditure in 1906 on benefits, &c., was
£12,089,500 (£2 14s. 9d. per sick person and
2s. 9d. per day of sickness).
Same as in Germany, but the period of relief
may not exceed twenty weeks, while the
benefits may not exceed 60 per cent, of the
local customary wages.
The total expenditure in 1906 on benefits, &c.,
was £2,126,000 (£1 7s. 9d. per sick peraon
and Is. 8d. per day of sickness).
Same as in Germany, but the period of relief
may not exceed twenty weeks.
In 1906 the expenditure on benefits was
£475,000 (£1 17s. per sick person or
2s. 2^d. per day of sickness).
Varies according to rules of funds and societies ;
ordinarily only sick-pay and funeral expenses
are provided for. In 1905 the total amount
of benefits paid was £200,000, or 4s. 3d. per
member.
Same as in Italy.
In 1906 the total cost of benefits, ifec, paid was
£19,000 (£1 10s. per sick person, or Is. 5d.
per day of sickness).
Sick-pay, with medical attendance and
medicine.
Same as in Italy.
Same as in Italy.
Same as in Italy
Same as in Italy.
Same as in Italy.
Same as in Holland.
C. 12281.
98
APPEN
ACCIDENT
Country.
1. Germany
2. Austria
3. Hungary
4. Italy
5. Finland
Nature of Systems in
Force, and Dates of
Principal Acts.
Compulsory — Acts
of 1884 and 1887
Voluntary
Compiilsory — Acts
of 1887 and 1894
Voluntary
Compulsory — Act of
1907
Compulsory — Acts
of 1898 and 1904
Compulsory — Acts
of 1895 and 1903
Scope of Systems.
For employ^ in trades and
agriculture whose annual
earnings do not exceed £150.
By special regulation may be
extended to employes with
earnings over £150, and to
small employers.
For employers and workmen not
coming under the compulsory
provisions
In 1906 there were 20,562,000
persons insured
For employes in trades and agri-
culture (if inanimate power
used) whose annual earnings
do not exceed £100
For employers and employes not
under the compulsory pro-
visions, if earnings do not
exceed £100
In 1905 there were 2,810,000
persons insured
For employes in large industries,
and for those in dangerous
occupations in petty indus-
tries and commerce
For workmen and employes in
all occupations if annual earn-
ings do not exceed £85
For workmen engaged in trades
and seamen, if annual earnings
do not exceed £30
In 1906 there were 81,000 work-
men and 3,000 seamen in-
sured (extension proposed)
Methods ot
Organization.
Trade associations of
employers orga-
nized on the prin-
ciples of mutuality
and self-govern-
ment ; also special
organizations for
public services
Territorial insurance
institutions ; also
trade associations
(chiefly railways)
National fund, with
local territorial
and factory
branches
National fund or
private institu-
tions at employers'
choice ; also
mutual insurance
associations
Same as in Italy (a
national fund has
not yet been es-
tablished)
DIX C.
INSURANCE.
99
Total Amount of
Premiums or Assessments
payable per Employs
per Annum.
Varies according to Paid wholly fey em-
Method of Contribution
of Premiums or
Assessments.
Benefits afforded.
trade-risks and
wages paid. The
average paid per per-
son insured in 1905
was 7s. 5d., the total
amount of assess-
ments received being
£7,891,000
Varies according to
trade-risks and
wages paid. In 1905
the average was
lOs. 4d. per person
insured. In 1905 the
total amount of
premiums was
£1,440,000
Varies (according to
trade - risks and
wages) from 2 to 4
per cent, of wages
Varies according to
tiiade - risks and
wages
Same as in Italy
ployers. The annual
liabilities are as-
sessed on the em-
ployers according to
wages and trade-
risks
Employers pay 90 per
cent, and employes
10 per cent, of assess-
ments calculated
according to wages
and trade-risks. The
assessments provide
for total liabiUty,
and are paid into a
fund
I'aid by assessments
on same principle as
in Austria ; for the
first ten weeks, ex-
penses contributed
equally by employ-
ers and workmen ;
after ten weeks paid
wholly by employers
Premiums paid wholly
by employers
Same as in Italy
The benefits commence when the sickness
benefits cease, but in any case not later than
the fourteenth week of incapacity,
(a) Free treatment and accident benefit up to
two-thirds of average annual earnings,
or free hospital treatment with allow-
ance to dependent relatives not exceed-
ing amount of annual earnings.
(6) Death benefit of twenty times the daily
wages, with pension to dependent rela-
tives up to 60 per cent, of wages.
In 1906 there were 936,491 cases of accidents.
Total compensations paid in that year
amounted to £7,148,000.
(a) Pension, after the fifth week, up to 60 per
cent, of average wages.
(6) Death benefit up to £2 2s. Od., with pension
to dependent relatives up to 50 per
cent, of wages.
In 1905 total compensations were £960,000,
paid to 62,968 injured employes, having
7,475 widows, 10,247 children, and 806
parents dependent.
Generally the same as in Germany, but accident
benefit may not exceed 60 per cent, of
earnings, and no indemnity is paid for less
than 10 per cent, of wages.
(a) Permanent total incapacity — ^lump sum of
six times the annual earnings and not
less than £120.
(6) Permanent partial incapacity — lump sum
of six times amount by which earnings
have been reduced.
(c) Temporary total incapacity — daily allow-
ance of half average wages.
(d) Temporary partial incapacity^ — daily allow-
ance of half the amount by which wages
reduced.
(e) Death benefit of five times annual wages.
(a) Permanent incapacity — pension up to 60
per cent, of wages.
(b) Temporary incapacity — after seventh day,
daily allowance up to 60 per cent, of
wages, or free hospital treatment, with
allowance to dependents up to 40 per
cent.
(c) In case of death — pension to dependents up
to 40 per cent.
In 1906, £18,000 was paid to victims of acci-
dents and their families.
100
Appendix C"
Accident
Country.
6. Holland
7. Norway
8. Sweden
9. France
10. Belgium
Nature of Systems in
Force, and Dates of
Principal Acts.
Compulsory-
1901
-Act of
Compulsory-
1895
-Act of
Voluntary — Act of
1891
Compulsory — Acts
of 1898 to 1907
Voluntary — Act of
1898
Compulsory — Act of
1868
11. Great Britain
Voluntary
Scope of Systems.
For workmen in trades, if the
daily wages do not exceed
6s. lOJd. (extension pro-
posed)
For workmen in trades if annual
earnings do not exceed £67
(extension proposed)
For all workmen (at option of
employers)
For seamen
For all workmen (at option of
employers)
For employ^ in trades and agri-
culture, if annual earnings do
not exceed £95, and for miners
For all workmen (at employers'
option)
Methods of
Organization.
Same a^s in Italy
State institution
Same as in Italy
State institution
Same as in Italy . .
Same as in Italy ;
for miners ther&
are special funds
Friendly societies-
and casualty com-
panies
101
- — continued.
Insurance — continued.
Total Amount of
Fiemiums oi Assessments
payable per Employ*
per Annum.
■^ame "as in Italy
Same as in Italy
Same as in Italy
Same as in Italy
Same as in Italy
Same as in Italy
Same as in Italy
Method of Contribution
ol Premiums or
Assessments.
Same as in Italy
Same as in Italy, but
costs of administra-
tion are borne by
State Treasury
Same as in Italy
Employers and work-
men each pay one-
half
Same as in Italy
Paid wholly by em-
ployers, except
miners' insuranoe,to
which employers,
workmen, State, and
Province contribute
Same as in Italy
Benefits afforded.
Permanent incapacity — pension (after the
seventh week) up to 70 per cent, of
wages.
Temporary incapacity — free treatment and
aUowance up to 70 per cent, of wages.
Death benefit of 30 times the daily wages
and pension to dependents up to 60 per
cent, of wages.
In 1904 total payments amounted to £137,000.
(a) Free treatment and accident pay up to
60 per cent, of wages, or free hospital
treatment and allowance to dependents
up to 50 per cent, of wages, to commence
after fourth week of incapacity.
(6) Death benefit of £2 15s. 7d., with pension
to dependents up to 50 per cent, of
{a) Permanent incapacity — pension of £17 per
annum.
(6) Partial incapacity — daily allowance of
Is. after the sixtieth day.
(c) Death benefit of £3 7s. 6d. and payment to
dependents up to £17.
(a) Permanent incapacity — pension of from £8
to £12 per annum.
(6) Temporary incapacity — accident pay.
(c) Death — pension to dependents of from
£7 lOi. Od. to £10.
(a) Permanent incapacity-^pension up to two-
thirds of wages.
(6) Temporary incapacity — sick-pay up to 50
per cent, of wages (after the fourth day),
(c) Death — pension to dependents up to 60 per
cent, of wages, with funeral expenses,
(a) Permanent incapacity — pension up to 50
per cent, of wages.
(6) Temporary incapacity — daily allowance up
to 50 per cent, of wages,
(c) Death benefit — funeral expenses and pen-
sion to dependents up to 30 per cent,
of wages.
For miners' funds benefits vary according to
rules.
The statutory schedule provides for —
(a) Inca;paoity — pension up to 50 per cent,
of wages, or lump sum as compensa-
tion.
(6) Death— three years' wages (not exceed-
ing £300, nor less than £150) to de-
pendents, or proportional sum to
^ ■ partial dependents.
1(2
APPEN
Invalidity and
Country.
1 . Germany
2. Austria
3. Italy
4. Finland
5. Belgium
6. France
Nature of Systems in
Force, and Bates of
Principal Acts.
Compulsory — Acts
of 1889 and 1899
Voluntary
Compulsory — Act of
1889
Voluntary — Act of
1898
Voluntary (compul-
sory system pro-
posed)
Compulsory — Act of
1868
Voluntary — Acts of
1850 and 1865
Compulsory — Act of
1881
Compulsory-
1894
-Act of
Voluntary — Acts of
1850 and 1886
. (Bill for compul-
sory system was
passed by Senate
in February, 1910)
Scope of Systems.
For all wage-earners whose
wages do not exceed £100 per
annum, and also for small
employers and home-workers
For workmen and small em-
ployers not coming under the
compulsory provisions
In 1907 there were 14,000,000
persons insured
For miners (extension to trades
proposed)
Includes about 150,000 miners
For ajl wage-earners . .
For all wage-earners
In 1906 there were 12,500 per-
sons insured
For miners (general compulsory
system proposed)
For all citizens
For seamen
For miners whose earnings do
not exceed £100 per annum
For all citizens
Methods of
Organization.
Territorial insurance
institutions ; spe-
cial funds for
miners and rail-
way employ^
Miners' relief funds
State institution ,
with local post
offices or other-
branches
Voluntary organiza-
tions regulated by
orders in Council
Miners' relief funds-
State institution . .
State institution . -
Miners'
funds
pension
State institution . -
N.B. — There are no systems of invalid or old-age insurance in Hungary, Holland,
systems is proposed ; in Great Britain old-age
DIX D.
Ol/d-age Insurance.
U«
Total Amount of
Premiums payable per
Employ^ per Annum.
Ranges from 7s. 7d. to
19s. 6d., according to
five wage classes. In
1907 the revenue
from premiums was
£8,900,000, giving an
average of about
12s. 9d. per person
insured
Varies in different
funds and according
to wages
Ranges from 5s. to £4
Varies according to
rules
Varies according to
rules
Ranges from £4 to £20
Varies
4 per cent, of wages. .
Ranges from £4 to £20
Method of Contribution
of
Premiums.
Paid half by employers
and half by work-
men, with a State
subsidy of £2 lOs.
Od. for each pension
paid
Paid half by employers
and half by miners
Paid by persons in-
sured. The State
adds a subsidy of at
least 10s. per head
to the pension
Paid by persons in-
sured
Employers, miners,
State, and provinces
contribute
Paid by persons in-
sured. The State
adds a subsidy of
one-third to the pen-
sion
Persons insured pay
premiums ; State
subsidy
Paid in equal propor-
tion by employers
and employes
Paid by persons in-
sured. The State
adds a subsidy of
one-third of pension
Benefits afforded.
(a
(after 200 contributory
Invalid pension
weeks).
(6) Old-age pension for septuagenarians (after
1,200 contributory weeks).
(c) Free treatment to prevent incapacity for
work, with allowance to dependents.
(d) Repayment of half the premiums in case
of death, accident, or marriage (before
pension has fallen due).
In 1907 the total expenditure on benefits was
£8,600,000.
(o) Invalid pension — average £10 fuU benefit,
and £7 6s. Od. others.
(6) Pensions to widows and orphans (up to
three-quarters of invalid pension),
(a) Invalid pension after five contributory
years.
(6) Old-age pension for sexagenarians after 25
contributory years,
(c) Reimbursement of premiums in case of
death before pension falls due.
InvaUd and old-age pensions, and pensions to
widows and orphans ; vary in different
funds.
Vary according to by-laws of funds.
(a) Old-age pensions commencing at age of
from 55 to 65, the amount varying ac-
cording to age at first payment (maxi-
mum £48 2s. Od.).
[h) Invalid pension pro rata according to pre-
miums paid.
(c) Reimbursement of premiums, in i
death before pension falls due.
(a) Invalid pension foom fiftieth year.
(6) Pension to widows and orphans.
of
Generally pension from fifty-fifth year.
(a) Old-age pension, after the fiftieth-year, up
to £50.
(6) InvaUd pension, for earlier infirmity, up to
£50
Norway, Sweden, and Great Britain. In Norway and Sweden the introduction of compulsory
pensions are paid under certain conditions by the State.
II>i^ D E X.
Accident frequency
89
Accident inauiance—
Australia
85
Austria
35
benefits afforded, Austria
36
Finland
53
France . .
66,67
Germany
26
Holland
60
Hungary
48
Italy ..
47
Norway
62
development of
14
development of compulsory svsten
in Italy
45
Finland
53
France
64-67
Germany
25
Holland
59
Italy
44
Legislation
'. '. 14, 16
17,18
Austria
36,39
Finland
52-54
France
65-68
Germany
25
Holland
59
Hungary
40-43
Italy
45-46
Norway
62
need for
14,87
Norway
62
organization . . . . 14
18,91
Austria
36
Finland
53,54
France
66,67
Germany . .
26
HoUand
59
Hungary . .
43
Italy
47
Norway
62
Scandinavian States
62
seamen (France)
67
(Holland)
61
transfer of risks
60
voluntary, defects in (Italy)
44
Acts in various countries
17
Actuarial problems of social insurance
89
Advantages of State insurance
89
Amiens (unemployment insurance) . .
74
Assessments, system of . .
19,91
Australia — accident insurance
35
experience of unemployment
83
friendly societies
84
life assurance . .
86
old-age pensions
85
policy of social insurance
84
trade unions . .
84
unemployment insurance
83,86
Austria— accident insurance
36
benefits afforded
36
compensation paid
37
differences from
German system
26
numbers insured
37
organization
36
premiums
37
Acts in force
36
early organizations
35
legislation proposed
88-40
miners' funds
38
pensions
38
sickness Insurance
37
benefits afforded
37
particulars of
37
recent de
velopments
38
Basle, unemployment insurance . . . . 78
Belgium, unemployment insurance . . 74
Benefits afforded (see sickness, accident, and
invalidity and old-age insurance).
Benefits of social insurance
Berne, unemployment insurance
Bibliography
Bismarck and social insurance
Board of Trade, England, functions of
Capital Ali6n6 and KeservS
Causes of unemployment . .
Centralisation
Churchill, W., unemployment insurance scheme
Classification of unemployment insurance
systems
Cologne, unemployment insurance
Collective insurance
Commission on insurance
Commonwealth (see Australia).
Commonwealth old-age pensions . .
Compulsory insurance (see also under various
countries) . . . . . . 16, 17, 18, 90
Compulsory unemployment insurance (St.
GaU)
Compulsory organization . .
Congress on insurance
Contributory system
Cost of social insurance . .
incidence of
Crudity of early systems . .
Defects in voluntary systems
in Ghent system
in voluntary unemployment schemes
Denmark
Desirability of State insurance
Development of accident insurance
of fundamental doctrine
of invalidity and old-age iU'
surance . . 15
of sickness insurance . . 11
of social insurance , . . . 11
Differentiation of risk . . . . 80
Difficulties of unemployment insurance . . 69
Dijon (unemployment insurance) . . 74
Educational effort . . 92
Effects of social insurance 87
Efficiency of worlonen . . 88
Extent of social insurance . . 16
Fichte . . . . 12
Financial organization 19
Finland . . . . 52
accident insurance . . . . 53
benefits afforded . . 53, 65, 57
invalidity and old-age insurance . . 56-58
legislation . . 52-54
modifications proposed . . . . 54
organization . . . . . . 53-55
pensions . . . . 54
sickness insurance . . . . 65, 56
France
accident insurance
for seamen
benefits . .
benefits afforded
development of systems
employers voluntary funds
invalidity and old-age insurance
legislation
miners' sickness funds
mutual aid societies
organization
sickness insurance
unemployment insurance
87
72
16
16, 21
77
67
70
91
78
Si
75
9»
92
85
71, 79
18
20
18
89,91
15,16
15
, 86, 90
81
80
76
8»
14
12
64
66
67
66
66,67
65
65
67
65-68
66
64
66-68
66
7t
106
Index — continued.
Trequency, accident
morbidity
mortality
Friendly societies in Australia
Fundamental doctrine
Genesis of doctrine
Garmany
accident insurance
89
89
34
11
12
21
25 33
agriculture and forestry . . '27
assessments . . 27
benefits afforded . . 26
compensation paid . . 27
indiutrial associations . . 26, 27
numbers insured . . 26, 27
organization . . . . 22, 27
special boards . . . . 28, 27
beneficial effects oi . . . . 87-89
benefits afforded .. 24, 26, 29, 33, 34
developments in future . . . . 34
efficiency of workmen . . . . 88
fundamental princiiles , . . . 22
improvements in processes and
appliances . . . . . . 87
invalidity and old-age insurance 28, 33
annuities granted , . 31
benefits afforded . . 29
incidence o f contributions 30
medical treatment . . 29, 32
payments granted . . 30, 31
organization . . 22, 29, 30
pensions, amount of 29
premiums . . . . 28, 31
territorial divisions . ^ 30
revenue , . . . 30, 31
wage — classes . . . . 28
contributions of 31
incidence of con-
tribution . 30
legislation , . . . 17, 23, 25, 29
numbers insured . . 33
organization . . 22, 24, 26, 29, 33
processes, improvements in . , 87
principal Acts . . . . . . 17, 21
prosperity increased . . . , 88
sickness insurance . . . . 24, 33
Acts in force . . . . 23
associations, number of . . 24
benefits afforded . . 24
early experiments . . 22
financial operations . . 25
members, numbers of . . 24, 33
organization . . . . 22, 24
revenue and expenditure 25
summary . . . , 33
unemployment insurance . . 75
Ghent system (unemployment insurance) . . 73, 83
defects in . . . . . , 81
Holland . . . . 58
accident insurance . . . . 59
annuities . . . , 60
benefits . , . . . . 60
invalidity and old-age insurance . . 62
legislation . . . . 68, 69, 62
organization . . . . 59
sickness insurance . . . , 58
State bank , . , . . . 59
unemployment insurance . . . , 75
Hungary . . . . . . , . 40
accident insurance . . . . 41
benefits afforded . . 43
legislation . . 40, 41, 43
organization . . . . 43
benefits afforded . . 41, 42, 43
early organizations . . . . 40
invalidity and old-age insurance . . 41
legislation . . . . . . 40, 43
miners' funds . . . . . . 41
organization . . . . 41, 42, 43, 44
sickness insurance . . ' . . 41
benefits afforded ' . . 42
legislation . . . . 40, 41
organization 42
unity of organization . . . . 44
Hygiene, improvements in '. . . . 87
Improvements in processes . . . . 87
Incidence and cost
Insurance in Australia
commission on
PAQB
15,16,91
.. 84-87
92
congresses on . . . . 20'
Institutions, insurance, in Australia . . 84-87
Insurance medicine . . . . 20'
Invalidity and. old-age insurance —
Austria (miners) 38
benefits afforded —
Austria . . . . 38
Finland . . 57
France . . 67
Germany 29'
Hungary . . . . 41
Italy . . . . 50'
development of . . 16-
financial organization 16
Finland . . . . . . 56
France . . 67
Germany . . . . 28
HoUand, draft Bill for . . 62
Hungary . . 41
Italy . . . . 46
legislation .. . . 15, 17
Austria . . 35, 3£^
Finland . . 52, 57, 68
France . . . . 66, 67
Germany . . 29-
HoUand . . . . 62
Hungary . . 41
Italy . . 46, 49, 50
Norway . . 64
need for . . 15
Norway . . . . 63
organization . . . . . . 16, 91
Austria . . . . 38
Finland . . 56.
France . . 67, 68
Germany . . . . 29
Hungary . . 41
Italy . . . . 49'
Norway . . 6-^
Invalid and Old-age Pensions Act 1908 . . 85-
Italy . . . . . . . . . . 44
accident insurance . . . . . . 44
benefits afforded . . . . 47
legislation . . 46
mutual insurance syndicates . . 47
organization . . . . 45, 46
voluntary system, failure of 44
benefits afforded . . . . 47, 50, 51
invalidity and old-age insurance . . 46, 49
benefits afforded . . . . 60
legislation . . 46, 49, 50
organization . . , . 49'
premiums 49'
legislation .. 45,46,49,50,51
organization . . . . 47, 49, 51
sickness insurance , . . . , . 51
unemployment insurance . . . . 75-
Labour exchanges, importance of . . 82-
Labour Exchanges Act 1909 , . . . 77
Lassalle, Ferdinand . . . . • 12
Laws on workmen's insurance . . . . 15, 17
Legislation . . . . . . , . 16, 17
Austria . . . . 35, 36, 89
Finland . . . . 52-68
France . , . . 65-68
Germany 23, 25, 29'
Holland . . 58, 59, 62
Hungary . . 40, 41, 43
Italy . . 45, 46, 49, 50
Norway . . 62, 63, 64
Leipsig (unemployment insurance) . . 76
Lex ^quilia . . . . . . 86
Limoges (unemployment insurance) . . 74
Localization of responsibility . . . . 16
Lock-outs . . 70
Lyons (unemployment insurance) , . . . 74
Malingering . . , . . . 91
Mario, Karl .. . . 12
Miners, insurance of —
Austria . . . . . . . , 38
Belgium . . . . . . 102
France . . . . . . . . 66, 6T
107
Index — continued.
Hodern conceptions ot social insurance
Moral eflfect of social insurance
Morbidity frequency
Mortality frequency
Motive for unemployment insurance
Mutual aid societies {France)
Mutual insurance syndicates (Italy)
National destiny
Nature of unemployment insurance
Need for accident insurance
invalidity and old-age insurance
sickness insurance
social insurance
Non-industrial classes
Norway
accident insurance
benefits afforded
invalidity and old-age, commission
legislation . . . . 62
sickness insurance proposed
imemployment insurance . .
■©Id-age insurance (see Invalidity and old-age
insurance).
Old-age pensions, Commonwealth . .
Organization . . . . 13, 14, 18, 19,
accident insurance . . 14,
Austria
Finland
Prance . .
Germany
Holland
Hungary
Italy . .
Norway
invalidity and old-age insurance
15,
Austria
Finland
France . .
Germany
Hungary
Italy . .
sickness insurance 13,
Austria
Finland
France . .
Germany
Hungary
Italy . .
unemployment insuran
Pension funds in Australia
Pensions, old-age (see Invalidity and old-age
insurance).
Premiums and assessment system . .
Problem of unemployment Insurance
Processes, improvements in
Heichstag, Imperial message to
Kheims, unemployment insurance . .
Ritiue professionel
Scandinavia, unemployment insurance
Scandinavian States
(See also Norway, Denmark.)
Scope of social insurance
Schaffle
Seamen, insurance of
Sickness insurance —
Australia . . 84
Austria
Benefits afforded in Austria .
Finland .
France
Germany .
Hungary
Italy
development of
Finland
France
Germany
Hungary
Italy
legislation . .
Austria
Finland
PAGE
H
88
89
89
80
64
47
12,16
69
14
13
87
90
62
62,63
62
64
63, 64
63
76
13,
22, 91
18, 91
36
63, 54
66,67
22, 26
59
43
47
62
18, 91
38
66
67,68
22,29
41
49
18,91
37
S5
66
22, 24 .
42
51
81
S6
19,91
68
87
17
74
14
76
62
16, 90
71
61, 67
So, 86
37
37
55
66
24
42
51
13
55
64,66
22
41, 42
51
17, 18
36, 39
52,55
Sickness insurance — eoniinusd.
legislation — continued.
France
Germany . .
Holland . .
Hungary . .
Italy
Norway , .
need for
Norway
Organization
Austria
Finland
France . .
Germany
Hungary
Italy . .
Simonde de Sismondi
Simulation
Social insurance —
Australia
benefits of
cost of
development of
difficulties of
doctrines of
genesis of . .
meaning of . .
national destiny
need for
policy of, in Australia
problem in Australia
scope of
Solidarity of the community
State insurance —
advantages ot
desirability of
Statistics in Commonwealth
St. Gall, unemployment insurance
Strasburg, unemployment insurance
Strikes and lock-outs
Switzerland, unemployment insurani
Territorial organization
Trade unions in Australia
Transfer of risks
Unemployed Workmen's Act 1905
Unemployment insurance
adjustment of risks . .
Amiens
assisted insurance schemes
in Australia. .
suggestions for
Basic
Belgium
Berne
Board of Trade, functions of
causes of . .
Churchill, W., scheme in Great
classification of systems
Cologne
compulsory scheme . .
Denmark
differentiation of risk
difficulties of
Dijon
England
Experiments in Europe
France
Germany
Obent system
defects in
Great Britain
historial dcvelopnient
Holland
Italy
labour exchanges, importance
Labour Exchanges Act 1909
T.eipsig
Limoges
lock-outs
Lyons
motive for
nature of
Norway
11;
Britain.
65,66
23
68
40,41
51
63
13
63
, 18, 91
37
65
66
24
42
51
71
22,91
84 to 87
87
91
12,15
93
11
12
11
12, 16
87
84
92,93
16, 90
11
89
71
76
70
71
30, 91
84
60
77
15,68
81
74
83
86
83
73
74
72
77
70
78
83
76
71
76
80
6&
74
76
71
74
75
74
81
76
71
76
76
82
77
76
74
70
74
80
69
76
108
Index—
-continued.
PAOE
PAOB
Unemployment insurance — continued.
Voluntary insurance
18
Organization
Eemforoement 1 motive for ..
81
defects of . .
81, 86, 90
81
failure in Italy
44
Eheims
74
uncmijloyment
. . 79, 80
St. GaU . .
71
Wages, adjustment of . ;
91
State subsidies
74
Wagner, Adolf . .
71
Strasburg . .
76
Winkelblech
12
Striljes
70
Workmen's insurance, laws on
17
Switzerland
71
(See also Social insurance.)
By Authority: J. Kemp, Government Printer, Melbourne.