Labour announces a “Real Jobs Guarantee”

In a speech given today (Friday, 16 March 2012) in Warwick, UK opposition party leader Ed Milliband launched the party's latest salvo against the Coalition. Should Labour win power at the next general election, Ed promised, the party would create the “Real Jobs Guarantee” to tackle youth unemployment.

Essentially, this is a relaunch of the Future Jobs Fund, which was actually a good idea in itself, but with a substantial training element and added sanctions.

According to Labour party press releases, the scheme would be:

• targeted at the under 25s
• open to those unemployed for one year or more.
• refusal to take up a placement could result in the loss of benefits.
• most opportunities will be created in the private sector, with smaller firms targeted.
• the government would pay the minimum wage for 25 hours of work for 6 months, a total of £4,000 per job.
• businesses would commit to pay for and provide 10 hours per week training (making a total 35 hour working week).
• in keeping with “balanced budget” rhetoric, the whole scheme will be paid for by a tax on bank bonuses.

So, this isn't really a “Job Guarantee” at all, at least not in an MMT sense. It's a guaranteed paid training contract where you could lose your benefits if you don't sign up.

Any programme which tackles the psychological and social burden of unemployment is always welcome, and providing the unemployed with the opportunity to take a real job is an obvious way to do this. In recognising that the young unemployed are not just terminally lazy but would welcome the chance to work is an important step, as is understanding that a real job requires a real wage.

However, the scheme design shows a strong influence of Coalition thinking:

Firstly, there appears to be a suggestion that the scheme is self-funding, as noted in the party statement indicating that it will be paid for by a bank tax. A tax on banker's bonuses would be popular and is probably not a bad idea in itself. But the fact that this jobs scheme is so directly linked in the party's own thinking with a “balancing” tax rise elsewhere suggests that Labour is still very tied to neo-classical economic analysis of government spending. As long as they are wedded to fighting on the same economic grounds as the Coalition, their policies will be hostage. Sayeeda Warsi of the Conservative party responded with a predictable counter-punch: “they've already spent the money they say they'd use to pay for it ten times over”.

Secondly, this scheme is going to be targeted at the private sector. There is a “presumption” towards smaller firms, but as a private sector scheme, there is still the issue of potential displacement. I think private sector bias this time around is based on the same logic that Minister for Employment, Chris Grayling MP used in his explanation of the Work Programme. Private sector firms are more likely to offer ongoing employment opportunities, so this is a “try before you buy” programme. However, there is no apparent requirement for the employment to continue for any length of time after the programme has ended. Firms will not take on new employees unless there is demand for additional supply. Can the private sector even create the 100,000 opportunities required?

Thirdly, the training element seems like a great idea, and effectively turns the jobs into paid apprenticeships. The training element will help to prevent the jobs from being “dead-end”, which has been a major criticism of may of the Work Programme “trainee shelf-stacker” roles. Is this what smaller businesses need right now, and can they afford the ten hours training overhead?

Capping the scheme at 6 months will only help if there is a job available at the end of the contract. This is the same trap the Future Jobs Fund and the Work Programme have fallen into. If they are unable to find employment after the scheme ends, will young unemployed be able to sign on to another training contract straight away? Will they have to sit on the dole for another year before they requalify? Is this a once-only scheme? As a general policy aspiration, I wouldn't expect these details necessarily to have been thought out yet, but if the Labour party actually expect this to work, it needs to fit into a longer-term, overall strategy to create jobs, which they need to be selling to the general public in plenty of time for the next election.

Finally, the punitive “take a placement or lose benefits” element is a sop to those elements in the conservative press who maintain the young unemployed are feckless and lazy. At a stroke, the positive approach of the Future Jobs Fund is turned into a Workfare programme. Do businesses really want an army of sullen conscripts? Do they have the resources to waste 10 hours per week training someone who patently doesn't want to be there? Surely the increase in weekly pay and the opportunity for a real job should be incentive enough?

The Labour Party have correctly identified that youth unemployment is a great threat to the UK's economic and social well-being. They have correctly proposed a scheme that would create real, paying jobs. But, they have taken the short-term route to justifying the scheme's expense that will leave it open to attack from their political opponents.

The announcement shows the party's priorities are in the right place, but even if they are elected, they are unlikely to achieve their goals without a deeper consideration and of the causes and cures for unemployment.

Links:

Labour Party Statement: http://www.labour.org.uk/ed-milibands-speech-to-labours-youth-conference

Guardian report: http://www.guardian.co.uk/politics/2012/mar/16/miliband-labour-youth-unemployment-work-experience

Press Association Article: http://www.google.com/hostednews/ukpress/article/ALeqM5g6tP5sulK6-eHFJGV7J8P1NC2iAQ?docId=N1138661331858085262A