Friday, March 2, 2012

Community Jobs Scotland - an overview

The Community Jobs Scotland scheme is, in essence, a continuation of the Future Jobs Fund that was launched towards the end of the UK Labour Government's tenure in 2009 and withdrawn after the Conservative-Liberal Coalition government was formed in May 2010. This new scheme is funded via the devolved Scottish Government and managed by the Scottish Council for Voluntary Organisations (SCVO) in partnership with Social Enterprise Scotland.

As with the Future Jobs Fund, Community Jobs Scotland (CJS) aims to provide six months' work experience at the national minimum wage (NMW) for young people who had been unemployed for six months or more. The primary target is long-term youth unemployed aged between 18 and 24, but the scheme is also open to 16-17 year olds and, in some areas of high unemployment, long-term unemployed aged 25 and over. Applicants must be referred through Jobcentre Plus or a Skills Development Scotland Advisori.

The CJS scheme also differs in that it is restricted to “Third Sector” only. The Future Jobs Fund simply required that any posts should have “community benefit”, but this was requirement was interpreted differently across the UK regions which took part in the scheme, leading to varying levels of private sector involvementii. CJS is specifically targeted at the Third Sector only, that is, charities, community groups, voluntary organisations, not-for-profit organisations and social enterprises in Scotland. In some cases these types of organisation have a specific definition in Scottish or English Law (such as a Registered Charity), or will be defined in UK tax law as such an entity, such as a Social Enterprise. In other words, there is generally a clear legal “marker” of some kind for most Third Sector organisations in the UK, although the term generally refers to anything that is not public/government sector and anything that is not private/commercial sector. There is no specific, single legal marker or definition of a “Third Sector organisation” in the UK.

The scheme is funded from the budget allocated to the Education department of the Scottish Government, along with additional funding from the European Social Fund. A budget of £10 million was allocated to the scheme for the year 2011-12, with a proposed budget of £6 million announced for 2012-13. The scheme set a target of creating 2000 opportunities in its first year, with half that number proposed for 2012-13. The vast majority of these opportunities are reserved for 18-24 year olds.

The Scottish Government is not monetarily sovereign, so budgets are allocated through negotiation and haggling with the central UK government in Westminster. At present, the UK has a pro-indepenence devolved Scottish Government run by the Scottish National Party (SNP) in Edinburgh and an ostensibly pro-union UK Government in Westminster. A referendum on Scottish independence is proposed in the next few years, so this scheme is set against a backdrop of the SNP setting out its stall for full Scottish independence.

Given the lack of monetary sovereignty in Scotland, or ability to borrow independently in sterling (or euros), a financial cap on the CJS scheme is a necessity. Even so, it is revealing that not only has the budget allocated to the scheme reduced in the coming financial year (2012-13), but that the cap has been set relatively low, given the rate of youth unemployment in Scotland. Over the period July 2010 to June 2011, there were on average 66,088 18-24 year-olds registered as unemployed by the Office of National Statistics (ONS) in Scotlandiii, against 296,674 employed. This means that the scheme at inception could only cover 3% of Scotland's young unemployed. The number of unemployed has risen since the scheme was introduced, and the number of opportunities has been reduced. The Scottish Government has maintained that its allocation of funds from the central UK government in Westminster has been cut, but as with all constrained budgets, the allocation of spending is revealing.

The funding allocation publicly announced for the CJS of £6 million for 2012 (shown as £4 millioniv in draft budget proposals) is out of a total budget for Employability Skills and Lifelong Learning of approximately £223 million. This is in turn just one part of Scotland's overall Education budget. By comparison, the budget allocated for renewable energy projects stands at £29 million, £49 million has been allocated to tourism, and £20 million from the same Education budget has been allocated to the promotion of the Gaelic language. This is not intended as a value judgement as to the relative usefulness of wind farms, Visit Scotland advertising or Gaelic language television, but these are examples of public spending on projects which are not generally considered front-line services so funds could potentially be redirected from one of these or other similar areas without a direct impact on welfare. These spending decisions suggest many areas are considered more of a priority than directly supporting youth employment.

The allocation of direct public spending will generally have the same overall effect on aggregate demand, and a job provided to a recycling awareness officer or tourist information bureau is as good as any other in this respect.

That said, the CJS does provide a source of free labour to charities and community organisations in Scotland, resulting in some community-based output that would not have otherwise happened. This may result in greater levels of community wellbeing than if the scheme did not exist and the money was spent elsewhere.

There is also potential for a small multiplier effect from these young people moving temporarily from welfare benefits into a higher-paid salary, since they are very likely to spend 100% of their income. It may be that these minimum wage jobs have a smaller net saving rate than other, better paid publicly funded jobs, but the macroeconomic effects are likely to be very marginal with such a small number of vacancies over a relatively short period.

Displacement in the Third Sector is less clearly documented than in the private and public sectors. The CJS, like the Future Jobs Fund, requires that the opportunities submitted for funding are “new” and would not have taken place otherwise. Blatant displacement would probably be discouraged by this requirement, but there have been examples in both the charities and public sector of paid staff being replaced by volunteers, so it is possible that some displacement could occur. Third Sector employment in the UK is often fixed term and project-based due to the variable nature of funding, so although it is less likely that the CJS workers will directly displace permanent employees, there is also less scope for ongoing employment offered at the end of the project without additional funding.

The SCVO is carrying out evaluations of the scheme, but no overall findings have yet been published. The scheme is very similar in nature to the Future Jobs Fund, so the impact is likely to be comparable. For the Future Jobs Fund, although the feedback from participants seems to have been generally positive, the scheme did not lead to an increase in employment levels that the new UK government felt justified the 'cost' of up to £6,500 per participant. This was, of course, set against a generally rising rate of unemployment in the UK during the period, when competition for permanent employment will have significantly increased.

Given the relatively small number of scheme participants compared to the numbers of unemployed, the CJS scheme cannot have a dramatic impact on overall youth unemployment in Scotland. Unless aggregate demand is supported, it is unlikely that new, permanent opportunities will be created sufficient to reduce unemployment. The charities and community groups involved cannot offer permanent jobs to participants unless they have sufficient funding to do so, just as a business cannot hire additional staff unless there is sufficient demand for the increase in output sufficient to cover the cost of hiring. Therefore, the CJS, though laudable, can be no more than a paid “work experience” programme to de-risk a small number of young and inexperienced workers.

Furthermore, as these jobs are temporary, there is the danger that younger workers could be locked into a cycle of short-term, low paid work, unless long-term employment opportunities are available. While some work experience is clearly better than none at all, short-term “work experience” projects cannot replace an adequate supply of permanent jobs with the opportunitiy to enhance pay and skills over a sustained period.

Without a net increase in the total quantity of jobs, more “young people” getting jobs means fewer “everyone else” get jobs. Youth unemployment has been thought to lead to “scarring” or hysteresis effects on long-term employment, so this sacrifice may be optimal given the constraints. However, this does not help overall unemployment levels in Scotland.

From a Job Guarantee perspective, the decision to allocate a relatively small budget to the project against other non “front-line” services funded via Edinburgh suggests that the CJS is another case of a government being seen to do something, rather than making a universal job guarantee a commitment and priority. Without a significant increase in aggregate demand, any scheme of this type is unlikely to create permanent new jobs; it can only reallocate the same quantity of resources. As it is budget-constrained, the Scottish government can only use the scheme to signal intent, perhaps remove some supply-side barriers to employment, and perhaps make sure public spending in Scotland has the maximum long-term investment or current multiplier benefit. The CJS scheme does give a working model of how a Job Guarantee could be phased in, targetting high-risk groups and community-based work, and how the scheme could be administered.

Ironically, set against the political backdrop of the independence campaign, the SNP-led Scottish government could use this scheme to promote the concept of a universal Job Guarantee in a monetarily sovereign Scotland, enabling them to engage the Scottish electorate in a truly unique selling point of independence which the three main “Westminster” parties are ideologically prohibited from offering.


ii Centre for Economic and Social Inclusion, Future Jobs Fund: An Independent National Evaluation, July 2011,

iii, Office of National Statistics, Regional Labour Market Statistics, February 2012.

iv Scottish Spending Review 2011 and Draft Budget 2012-13

No comments:

Post a Comment