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
