Journal of US-China Public Administration, November 2014, Vol. 11, No. 11, 884-893
doi: 10.17265/1548-6591/2014.11.002
D
DAVID
PUBLISHING
Effective Unemployment Counteraction as a Determinant of
National Security
Błażej Balewski
Higher School of Personnel Management in Konin, Konin, Poland
Management process, which is an attempt to cater for an infinite number of human needs with a finite number of
production factors, takes place in a closed flow of money and goods. Labour market, characterized by a high level
of entropy, is one of the elements of this flow. In the view of the disorder which presents in the labour market, it is
understandable that the state intervenes in this market. Interventionism usually takes place in such areas of the
economic policy as employment policy and labour market policy. When state intervention in this market is
characterised by economisation, which means making activities more efficient or more economical, the level of the
national security is rising. This is due to the fact that the unemployment rate actually decreases and the amount of
funds earmarked for interventionism, which come from non-repayable obligatory public levies is optimized.
Keywords: effective unemployment counteraction, unemployment, labour market policy, types of labour market
active policy effectiveness indicators
The economical process proceeds within the closed money-goods flow. One of the elements of this
mentioned configuration is a labour market, characterized with the high entropy level. The chaos existence in
the labour market justifies government intervention. This occurs in the context of both employment and labour
market politics. When this stimulus is effective, this increases the level of national security. It happens as a
result of decreasing the unemployment level and the intervention expenses optimizing, which is particularly
important because all these resources come from taxes.
Reasons and Forms of Interventionism in Labour Market
Human needs increase infinitely. The demand that they create is satisfied by processing a limited number
of production factors. This process is based on business activity, also called economic management and
conducted as a part of a closed flow of money and goods (see Figure 1).
This system is rather impenetrable, but still vulnerable to quantitative and qualitative changes. It consists
of producers, consumers, activities, and relations among them. The activities of a vast number of management
process entities, such as purchase of production factors by companies and institutions, and consumers’ expenses
incurred when purchasing goods indispensable to satisfy their present needs, take place in two types of markets:
the market of production factors and the market of consumer products and services (see Figure 1).
The market of production factors consists of the capital market, the property market, and the labour
market.
Corresponding author: Błażej Balewski, Ph.D., Dean of Economic Faculty, WSKM Konin, Konin, Poland; research field:
HRM effectiveness. E-mail: [email protected].
UNEMPLOYMENT COUNTERACTION AS A DETERMINANT OF NATIONAL SECURITY
885
Until now, numerous economic laws regulating the processes taking place between and within markets have
been discovered. Labour market takes a special importance in research studies on the laws governing markets.
This stems from the fact that it is characterised by the highest level of disorder (entropy) demonstrated, for
example, with the existence of periodical exceptions from even the most classic rules, such as the Phillips curve.
On the basis of the Phillips curve (see Figure 2), it is generally assumed that in the labour market, there
exists a short-term inversely proportional correlation between a change in the inflation rate and a change in the
unemployment rate. Unfortunately, this rule often does not apply to the current1 flow of goods and money in
Poland. This obviously leads to making attempts to belie law by including an analysis of different factor(s).
Consumer expenses
Market of consumer
products and services
Consumers
Consumer products and
services
Production
factors
Producer revenues
Consumer products and
services
Production factors
remuneration
Production factors
The market of
production factors
Producers
Production cost
Figure 1. Closed flow of goods and money in economy. Source: Kamińska, Kubska-Maciejewicz, and Lauda-Trynka
(1995).
Unfortunately, the newly discovered patterns correlating a drop in unemployment rate (↓) and consumer
price index (↓) with demographic and migration processes demonstrated by the change in the average number
of people per household, do not transform the existing law into a rule that would guarantee achieving
negentropy in the labour market2 (see Figure 3).
It is the appearance of at least one period when negentropy in the labour market cannot be achieved owing
1
This phenomenon has been observed since the beginning of the economic transformation, similarly to the growth of
unemployment rate despite an observed decrease in the value of wealth per employed person. Source: Balewski, B. (2007).
Unemployment counteraction coefficients—The Polish labour market. In D. Kopycińska (Ed.), The policy of the EU Member
States in relation to labour market competitiveness (p. 127) (Economics & Competition Policy No. 9), Faculty of Microeconomics,
the University of Szczecin, Szczecin.
2
The state of nearly full employment, in literature, its definitions vary. This variation stems from the fact that researchers prefer
different types of political systems. Therefore, the supporters of centrally planned economy opine that full employment is a state
when every person able and willing to work will be provided with a job in a short period of time. Moreover, they should be
qualified for that job, whereas the job should meet all the conditions stated in the labour law. On the other hand, the supporters of
economic liberalism opine that full employment is a state when economic and social costs of unemployment, which is a natural
symptom of excess supply of jobs as one of production factors, would be the lowest. What both of those approaches share is their
pursuit of this particular state, which constitutes one of the main goals of state economic policy. Source: Balewski, B. (2006).
Psychosocial and economic effectiveness conditions of active forms of counteracting unemployment (p. 31). Unpublished PhD
thesis. Faculty of Management, University of Economics in Poznań, Poznań.
886
UNEMPLOYMENT COUNTERACTION AS A DETERMINANT OF NATIONAL SECURITY
to independent market forces and processes accompanying management that justifies the need for the so-called
employment policy to be introduced by the state.
Year-on-year growth of
consumer price index
Unemployment rate
The Phillips curve
Figure 2. Correlation between the consumer price index and the unemployment rate in the Wielkopolska Province in
the years 2000 to 2009. Source: the author’s own study as a part of research studies in the project “Observations of the
Eastern Wielkopolska Labour Market” carried out by Konin Chamber of Commerce in cooperation with the School of
Management in Konin and the District Labour Office in Konin, financed from the ESF (European Social Fund).
Year-on-year growth of
consumer price index
Unemployment rate
Δ of an average number
of people per household
year-on-year in % (the
previous year 100%)
Figure 3. The correlation between the consumer price index and the unemployment rate, and year-on-year changes
(in %) of the average number of people per household in the Wielkopolska Province in the years 2000 to 2009. Source:
the author’s own study as a part of research studies in the project “Observations of the Eastern Wielkopolska Labour
Market” carried out by Konin Chamber of Commerce in cooperation with the School of Management in Konin and the
District Labour Office in Konin, financed from the ESF.
The Character of Active Labour Market Policy
One of particularly visible forms of the “state influence on dynamics, structure and functioning of the
economy” (Winiarski, 2001, p. 17) is the so-called employment policy, in particular, labour market policy.
Employment policy has been redefined a number of times since it was created at the beginning of the 20th
century (see Table 1).
UNEMPLOYMENT COUNTERACTION AS A DETERMINANT OF NATIONAL SECURITY
887
Taking together the existing concepts of employment policy allows one to conclude that this policy is a
form of state intervention in the labour market aimed at introducing pro-developmental economic and social
changes in this market. Labour market policy is a special form of employment policy.
It can be divided into passive and active policy, depending on the way it is implemented in the economy
(see Figure 4).
Table 1
Chosen Approaches to Employment Policy
Author
Character and functions of employment policy
“(...) state authorities actively influence the labour market taking into consideration the needs of the country’s
B. Winiarski
economy and reconciling the interests of employers and workers”.
“(...) in a dynamic system, employment policy establishes and clarifies the power which governs the correlation
between economy development process and demographic and social processes. The policy indicates some
M. Sęp
defined employment goals, as well as methods, measures, and paths leading to achieving these goals. Thus, it
influences employment”.
“(...) employment policy, as a connection of economic and social policy elements, consists in developing and
K. Markowski
implementing employment programmes with some major goals concerning development of the state economy”.
“(...) sign of activities aimed at rational allocation of human resources (...)”. “(...) that the main goal of
Z. Wiśniewski
employment policy is maintaining an unemployment rate that the society would be able to accept (...)”.
The aims of employment policy (policy counteracting unemployment) are to alleviate the financial burden of
unemployment, periodically activate the unemployed with the means of active forms of employment promotion
M. Kabaj
(as an integral element of socio-economic policy) and analyse and eliminate the factors that generate
unemployment.
J. Gogolewska Employment policy serves social and economic functions.
“(...) employment policy should have a local character and it is not equal to labour market policy. Employment
policy is mostly aimed at maintaining the existing jobs and creating new jobs on the so-called primary market,
W. Jarmołowicz
whereas labour market policy is a part of employment policy which concentrates on solving structural and
social problems in the already existing labour market”.
Note. Source: the author’s own study on the basis of Balewski (2007, pp. 129-130).
Passive labour
market policy
Legislative procedures carried out in order to create a cohesive labour
law: the so-called autonomous regulators. These are mechanisms which
influence the situation on the labour market without the necessity to
make separate decisions each time they are needed, for example,
specifying the limit of overtime. The regulators are also: employment
benefits, early retirement allowance, early retirement benefits,
temporary and designated benefits, payments in kind, severance
payments, and other social benefits.
Serves protective-social functions
Labour market
policy form
Apart from legislation, these are direct actions undertaken by the
authorities on the labour market through developing and implementing
non-autonomous regulators (mechanisms that require a separate
decision of the authorities each time they are needed).
Active labour
market policy
Aimed at professional activating of the unemployed, especially those
from the high-risk group, reducing structural discrepancies on the
labour market, increasing productivity of labour force, verifying of
readiness for employment, and influencing the unemployment rate. It
can also support cooperation, transition from part-time to full-time
employment and from the education system to the labour market, as
well as promote equal opportunities on the market.
Figure 4. Characteristics of labour market policy forms. Source: the author’s own study based on Balewski (2008, pp.
98-99).
888
UNEMPLOYMENT COUNTERACTION AS A DETERMINANT OF NATIONAL SECURITY
Passive labour market policy is a factor that promotes order in the system without the need to intervene
such order each time is needed. Active labour market policy, on the other hand, is a form expected by the
members of the so-called high-risk group that poses a potential threat for the state security.
In the most recent binding Polish normative act regulating the labour market, the following elements are
considered as active labour market policy instruments: interventional jobs, public works, trainings and labour
market instruments that promote basic labour market services (i.e., internships, covering transport costs for an
employee if an employer has reported vacancies, financing accommodation in a workplace, co-financing
equipment, legal consulting and counselling, reimbursing the costs of social contributions, etc.).
They should be implemented according to the rules of carrying out economic policy with a proper use of
economic laws. In accordance with the praxeological approach, they should also follow the rules of
economisation, i.e., they should be ever more efficient or more economical (Balewski, 2007, p. 130).
Effectiveness of Active Forms of Counteracting Unemployment
The notional category “effectiveness” has been used for a long time now. Its popularity has made this term
very polysemous. All its meanings are based on the basic lexical approach to effectiveness and the display of
activities and products of human beings, or animate and inanimate nature (Balewski, 2007, p. 130) (see Table 2).
The term “effectiveness” derives from Latin words: effectio/effectionis; effector/effectoris/effectrix;
effectus (Komaniecki, 1984, p. 179). The first notion means “an acting force, performance”. The second one
originally meant “a creator” or “a doer” while the third notion meant “execution, setting up, achievement, result,
accomplishment or causing something to happen” (Winniczuk, 1975, p. 366; Komaniecki, 1984, p. 179) and
also “efficiency”. Therefore, effectiveness is often understood, especially by linguists, as an efficient display of
human activity (Balewski, 2006, p. 107; Kopaliński, 1985, p. 111).
Table 2
Word-Formation Analysis of Chosen Notions
Basic word
Derivative word
efektywny
efektywnie
(adjective: effective)
(adverb: effectively)
trafny
trafnie
(adjective: accurate)
(adverb: accurately)
skuteczny
skutecznie
(adjective: efficient)
(adverb: efficiently)
celny
celnie
(adjective: accurate)
(adverb: accurately)
Note. Source: Klucz, Janowski, and Balewski (2009, p. 238).
Word stem
Affix
Alternation
efektywni
-e
n:ń
trafni
-e
n:ń
skuteczni
-e
n:ń
celni
-e
n:ń
In the ancient civilizations of the Mediterranean Sea, correlating meanings of effectiveness and efficiency
had its cultural justification. The source of those terms could be found in understanding profligacy as a
characteristic that excludes an individual from the society and one of the reasons for depriving an individual of
his or her capacity to perform acts of law (Rozwadowski, 1992, p. 110).
However, modern linguists and language researchers underline that the concept of “effectiveness” differs
from the concept of “efficiency” (Balewski, 2006, pp. 108-109), and from the term “effectiveness” (Tytuła &
Okaramus, 2007, p. 54).
Not only linguists, but also representatives of other disciplines study the closed knowledge about the
concept of effectiveness which contributes to creation of different types of effectiveness. The most important of
UNEMPLOYMENT COUNTERACTION AS A DETERMINANT OF NATIONAL SECURITY
889
those is: the concept of technical-economic, praxeological, bureaucratic, humanistic, personality-behavioural,
and social effectiveness (see Table 3).
Table 3
Approaches to Effectiveness
Type of approach
Etymological-synonymous
Effectiveness
Praxeological
Bureaucratic-organizational
Personality-based and
behavioural
Technical-economic
Social
Humanistic
Description
Effective/efficient activity is one that leads to achieving an established goal, regardless of
whether this goal and the measures applied to achieve it were moral and socially acceptable.
Effectiveness is a positive feature of the activities whose result is seen as positive,
regardless of whether such result was intended or not.
Control based on knowledge
Efficiency does not equal to effectiveness as efficiency defines the current level of task
implementation while effectiveness defines to what extent a given individual has gone
beyond the current tasks.
“Ex-post”—relation between the results achieved and the input required to achieve them.
“Ex-ante”—relation between the goal of an activity and the expected input required to
achieve this goal.
The extent to which given social goals can be achieved, taking into consideration social
costs of their achievement. There are three levels at which social goals of labour can be
achieved (1—organization level; 2—task group level; 3—organization member level).
There are no effective organizations without effective teams and individuals.
Note. Source: Klucz, Janowski, and Balewski (2009, p. 239).
Nearly all those concepts indicate that the category of effectiveness determined by numerous variables is
not equal to the notion of efficiency3.
Moreover, when analysing the effects of activities carried out by employment services and the basic
effectiveness criteria which they use, it can be concluded that these services treat effectiveness and efficiency
as one. These terms, although close in meaning, in the actual economic life denote two different concepts
(Balewski, 2008, p. 99). In Polish, the term “efficiency” (“skuteczność”) comes from the words kuty, kuchcić,
which translate into “adorn”, “romp”, “act”, “do”4. The echo of this fundamental meaning can be found in the
praxeological approach to efficiency. Taking this into consideration, it can be concluded that effectiveness
(action) in economy takes place when measures and goals are not excluded (Zieleniewski, 1981, p. 194). In the
case of active labour market policy, efficiency means activities aimed at using growth factors in order to
optimally shape the level of registered unemployment (Balewski, 2008, p. 100). Whereas, effectiveness should
be defined as achievement of the established goal accompanied by minimisation of costs incurred in the process
(Kotarbiński, 1972, p. 39).
The instruments that support the activities aimed at permanent differentiation of effectiveness and
efficiency of active forms of counteracting unemployment and economisation of those forms are, among others,
labour market active policy indicators. Unfortunately, they rather often depict incorrect, synonymous
understanding of the categories of effectiveness and efficiency, or they extend the semantic field of the term
“effectiveness”, bringing it closer to the term “efficiency” (see Figure 5).
Popularization of using the effectiveness formula of active forms of counteracting unemployment, which
demonstrates the relation between changes in the cost of reemployment and changes in the unemployment rate,
indicates that the active policy of the labour market is directed at increasing the level of national security.
3
“However, many distinguished theoreticians of economics and management still use those terms interchangeably”. Oleksyn, T.
(2006). Competence management (p. 76). Oficyna Ekonomiczna, Kraków.
4
Bruckner, A. (1985). Etymological dictionary of Polish language (pp. 287-288, p. 498). Wiedza Powszechna, Warsaw.
890
UNEMPLOYMENT COUNTERACTION AS A DETERMINANT OF NATIONAL SECURITY
Types of
active labour
market policy
indicators
Indicators showing the quantitative
range of active labour market policy
influence
Activation size indicator
Indicators showing the estimated cost
of permanent employment of
programme participants
Cost of reemploying the participants of the
programme (of the instrument)
Indicators showing changes in
unemployment rate in the view of
renewals of benefit entitlements
For example, indicator showing the right to
resume social benefits
Indicators showing the relation
between resources saved on benefits
that have not been claimed by
participants of the programme and tax
revenues from employees who took
part in the programme, and the
programme costs
Formula used in a programme called
“Temporary Employment Subsidy”—the
UK
Indicators showing the relation
between the cost of the benefits
claimed by a group of people whose
number is similar to the number of
programme beneficiaries and the cost
of the programme
Formula used in a programme called
“Small Firms Employment Subsidy”—the
UK
Indicators of the unemployed
activation economisation as a part of
active forms of counteracting
unemployment
Relation between the cost of reemployment
of programme participants in period n (Gn)
and its indexed cost in period Q compared
with the relation of changes in the
unemployment indicator in period n i 0
Figure 5. Types of labour market active policy effectiveness indicators. Source: the author’s own study on the basis of
Balewski (2007, pp. 131-132).
Effective Labour Market Policy and the National Security
The aspect of security constitutes a separate field of study in many disciplines5. Some of them also refer to
the notional category of the national security, indicating that it concerns: territorial integrity, sovereignty,
freedom to choose a given political path, welfare, and development conditions (Balcerowicz, 2011).
In the literature on this subject, a lot of attention has been paid to discovering the character, signs, and
conditions of development. It has been the area of interest for both the representatives of formal and empirical
sciences (see Figure 6).
Analysis of the existing approaches to development allows one to notice that this category has an
extensive semantic field. A significant element of development is its transition from one state of a system to
another. The original, primary system is often called a natural system. In closed systems, the entropy level for a
natural system equals 06, whereas in a system which is undergoing change, the level of chaos increases at the
beginning, then drops and eventually comes back to the value of chaos that equals the original value.
5
Including research on social policy, the state, law, etc.
The value is based on a theorem S = k ln W where: W is the probability of a state and equals W = n!/(n - k)! x k!, ln is a natural
logarithm, k is the Boltzman constant; k = 1.3806488 (13) x 10-23. Source: Zabłocka, T. (Ed.) (1973). Organism as a biological
unit. Materials for teachers of extra-curricular classes for biology-chemistry groups (p. 15). PZWS, Warsaw.
6
UNEMPLOYMENT COUNTERACTION AS A DETERMINANT OF NATIONAL SECURITY
891
J. J. Rousseau concept of “denaturalisation”—substituting everything that is
characterised by naturalness “by what is artificial, and suppressing emotion with
intellect”.
T. Kotarbiński indicates that “(...) the state of balance in a given aspect can be often
achieved with a winging movement, by going from one extreme to another, or at least
from one deviation to an opposite deviation”.
According
to formal
sciences
O. Spengler indicates that “(...) the source of all great inventions and undertakings is
the happiness of strong people enjoying their victory (...)”, which is an “(...) expression
of personality, not a result of a utilitarian mindset of the masses (...)”.
Structuralism indicates that development is a transition in time (t) of a given structure
(St) to a next structure (St + 1) which comes after it in time (t + 1), and then from
structure (St + 1) to structure (St + 2), from structure (St + 2) to structure (St + n).
Approaches
to
development
According
to empirical
sciences
Classic movement underlines that the necessary prerequisite for the prosperity of
nations (their economic development) is accumulation of capital.
Pre-classic economics indicated that the basic factor influencing the (economic)
development of a nation and social welfare is interference of the state in processes of
management and gathering standard money (mercantilism) and working in agriculture
that generates economic surplus (physiocratism).
Marxism assumed that development depended mainly on technical progress. However,
it proved that the consequence of accumulating capital is its concentration and
centralisation. This, in turn, brings about contradictions between the social character of
production and private appropriation.
Figure 6. Chosen approaches to development. Source: the author’s own study on the basis of Balewski and Janowski
(2007, p. 59) and Balewski and Chomicz (2009, p. 66).
Therefore, it seems justifiable to assert that national security, which derives from and serves the
development, is at the highest level in the original system. A change in the system can significantly
compromise security at the beginning, but eventually it can lead to a growth of negentropy (not chaos)7 and
thus what can be achieved is the level of national security whose value equals the original state although this
state exists in a different space-time.
In practice, the natural system hardly ever occurs. There are many reasons for that, one of which is
conducting business activities that involve sale and purchase of human labour.
It is common knowledge that these transactions result in a lot of chaos. National interventionism, which
employment services are engaged in, is expected to be a pro-developmental factor introducing order to entropy
in the labour market. Unfortunately, many elements of interventionism actually increase entropy and distance
society from complete, or nearly complete, national security. This can be noticed especially during an analysis
of the effectiveness indicators of the forms of counteracting unemployment used by employment services (see
Table 4).
7
Is = -S. Source: Zabłocka (1973, p. 16).
892
UNEMPLOYMENT COUNTERACTION AS A DETERMINANT OF NATIONAL SECURITY
Table 4
Comparison of the Level of Reemployment Resulting From Active Forms of Counteracting Unemployment in
the Mogilno District in the Years 2006-2007
No.
Active forms
1
Trainings
Assisted employment
2
(intervention works)
3
Public works
4
Internships
5
Community service
6
Professional training
One-time grant to start one’s
7
own company
Providing additional
8
equipment for a place of work
Total/Average
2004
2005
Effectiveness rate after the
Effectiveness rate after the
Total number end of the programme
Total number of end of the programme
of participants
participants
Participants % (percent)
Participants % (percent)
239
115
48.1
290
249
85.8
360
293
81.4
183
98
53.6
168
242
52
120
113
135
24
109
67.3
55.8
46.2
90.9
196
361
45
98
103
6
31
28.5
13.3
31.6
68
68
100.0
67
67
100.0
1,308
622
47.6
1,181
789
66.8
Note. Source: the author’s own study on the basis of Bochenek (2008, p. 44, p. 46).
The Polish employment services use an indicator called reemployment rate (Kołodziejczyk, 1995) which
only demonstrates the efficiency level of individual activities within the local active labour market policy.
However, it obviously does not demonstrate the economic effectiveness of more and more costly instruments of
labour market (see Table 5).
Table 5
Level and Cost of Professional Activation of the Unemployed in the Mogilno District in the Years 2006-2007
No.
1
2
3
4
5
Activation form
Trainings
Assisted employment
(intervention works)
Internships
Community service
Professional training
People employed in 2006 Financing 2006
115
120,100
People employed in 2007
249
Financing 2007
85,000
293
915,047
98
713,886
135
24
77
298,745
45,155
251,256
103
6
31
936,357
39,630
345,397
Note. Source: Bochenek (2008, p. 47).
This of course inclines us to measure the effectiveness of labour market instruments with the
economisation indicator of activation, which is an active form of counteracting unemployment (see Table 6).
Table 6
Effectiveness of the District Employment Office in Mogilno in 2007
No.
1
2
3
4
5
Activation form
Trainings
Assisted employment (intervention works)
Internships
Community service
Professional training
Note. Source: Bochenek (2008, p. 49).
Effectiveness in 2007 (%)
63
-165
-367
-299
-288
UNEMPLOYMENT COUNTERACTION AS A DETERMINANT OF NATIONAL SECURITY
893
Only then can we notice that a higher level of order in the labour market as a system is never achieved,
even though there are numerous activities carried out in this system, which incur ever higher costs. Therefore,
regression and lack of prosperity and welfare are noticeable, which leads to an increasingly lower level of
national security.
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