The Ministry of Labour had been set up in 1916. After the war it exercised what Macnamara was to describe as both temporary and permanent functions. The former involved the resettlement in civil life of ex-Service men; the latter, negotiations with Labour leaders (though the Prime Minister continued to play a major rôle) with the Whitley Councils created since 1917 and the Trade Boards established under the Acts of 1909 and 1918, and responsibility for the operation of the Employment Exchanges and the Unemployment Insurance Acts. Unemployment and its consequences were to occupy most of Macnamara's time as Minister. In 1919, during the first months of peace, British industry experienced a boom that seemed to herald a return to prosperity. It was short-lived. Now, coincidental with his appointment, large-scale, persistent unemployment made its appearance.

Before he assumed his duties, the new Minister took a holiday on the Kent coast. At Margate the golden jubilee conference of the National Union of Teachers was taking place. W. P. Folland, the retiring president, who had been a fellow student at Borough Road forty years before, invited him on to the platform to address the assembled teachers. Like a mariner who had come home after the longest and most adventurous cruise of his life, his mind, he said, was filled with old memories. He had joined the Union thirty-seven years before, he had maintained his membership and his subscription was paid for the current year (Applause).