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withdrawn after the Conservative-Liberal Coalition government was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.
References:
ii Centre
for Economic and Social Inclusion, Future Jobs Fund: An
Independent National Evaluation,
July 2011,
iii http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-226946,
Office of National Statistics, Regional Labour Market Statistics,
February 2012.
iv http://www.scotland.gov.uk/Publications/2011/10/04153155/0
Scottish Spending Review 2011 and Draft Budget 2012-13
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