Labour's jobs guarantee for the long-term unemployed is a partial break from the orthodoxy. It is a break in that by placing the government as the employment guarantor of last resort it implicitly recognises that the hidden hand of the market is structurally incapable of providing jobs for all. But it is only partial because the nature of the jobs offered are, well, not really jobs.
Take this piece on the Prospect blog by Spencer Thompson of IPPR, for example. Spencer makes the very sensible point that the government's current 'wage incentive' scheme (whereby the wages of new hires are part-subsidised by the tax payer to encourage job creation) is hardly making inroads to the long-term young unemployed as the most "employable" - i.e. the best educated - are far more likely to be taken on than your veteran NEET. In fact, as this layer are the least likely to spend prolonged periods on the dole it is smoothing the passage back to work for those who were already best placed.
Instead,
we should adopt a job guarantee for young people, with an offer of work experience to all those out of work and on jobseeker’s allowance for a year or more. It should be paid at the minimum wage in order to allay the justified concern with earlier “workfare” schemes. But it should also be combined with sanctions, with an obligation on the young person to take up the offer or find an alternative. This would have an immediate impact on youth unemployment in the UK, as well as providing much-needed labour market experience for many of the hardest to reach unemployed.When is a jobs guarantee not a jobs guarantee? When all that is on offer is work experience. The implicit assumption underlining Spencer's argument is that long term unemployment stems from job market unsuitability. Therefore what is required is to get the NEETS and others into minimum wage schemes under pain of sanction that can train them up to the kinds of worker employers might want to employ. Hence it is envisaged very much as a temporary patch. Nowhere is there any realisation that jobs are in very short supply, and that training up loads of unemployed young people will not in and of itself ameliorate that situation (apart from the multiplier effects of hundreds of thousands on such schemes having more cash in their pockets).
Why do I suspect this or something very similar will not be a million miles away from Labour's scheme? Because Ed Balls in his announcement said "Our Jobs Guarantee for adults will build on the model of the Future Jobs Fund with government working with the private and voluntary sectors to ensure there is a job paying the minimum wage for every long-term unemployed person." Tax-payer subsidised profits for Tesco? No thanks. An army of economic conscripts that will undermine the wages and conditions of current workers? Not a great idea. I'm sorry, but this is not good enough. While there is much flesh to be put on the bone, the preview offered is tepid and will compound the insecurity many workers at the low wage end of the labour market already feel. Tried and tested is the jolly old public works programmes - what's wrong with that? Or why not be more ambitious and organise 'jobs guarantee' workers into state/local authority-owned businesses or cooperatives to address identified developmental needs? Or something else the weird and wonkyful could dream up? Perhaps, just perhaps, the jobs guarantee might like to draw on the experience of trade unions to advise, lead and deliver such schemes. After all, they're only the democratic representatives of working people.
The principle of a jobs guarantee is a good thing. It is a marker of the increasing differences between Labour and its opponents, and signals a further step away from neoliberalism's policy straitjacket. But it has to be worthwhile. It has to train people, give them something useful to do, restore a sense of self-respect and *not* undermine the existing workforce. It requires a real leap of political imagination as well as a not inconsiderable amount of courage. Is the labour movement up to it?
8 comments:
Phil,
Its not necessarily due to a lack of jobs. As Marx described in Capital, and as has been seen time and again, unemployment usually also goes along with people having to work extended hours to earn a decent wage, people doing 2 or 3 jobs to scrape a living etc.
In fact, the two things tend to go together. As unemployment rises, workers position weakens, and wages get squeezed. As their wages get squeezed, they have to do more work, more jobs, to make ends meet. The more workers take on second and third jobs, or do long hours, or work past retirement age, the less workers capital requires to provide a given amount of labour-power.
A vicious circle.
Once again, breaking that vicious circle requires that workers must be guaranteed a high level of Minimum Wage, so that they are not forced into doing several jobs, or working long hours. It means capital is forced to innovate and introduce additional capital, so that it can raise productivity and produce at a profit. Those firms that can't are forced out, and their capital re-allocated to where it can be used more efficiently, providing well-paid, sustainable jobs.
“The market is structurally incapable of providing jobs for all.” So they had full employment in Russia and Eastern Europe during their “non-free market" period: i.e. when they had central economic planning? That wasn’t the impression I got from the couple of books I read some time ago about centrally planned economies.
Next, you criticise the “wage incentive” scheme on the grounds that it does not deal with the long term unemployed. Well that scheme isn’t aimed at the long term unemployed. It’s aimed at the disadvantaged and disabled: a different problem. The fact that asprin doesn’t cure chicken pox is not a good criticism of asprin.
“It should be paid at the minimum wage in order to allay the justified concern with earlier “workfare” schemes. The fact of paying the minimum hourly wage doesn’t mean the relevance scheme is not a workfare scheme. My Oxford Dictionary of Economics defines workfare as “A system making income support for the unemployed conditional on their performing some form of work for which they are suitable.” So if someone is forced by the workfare “sanction” to do a job that pays the minimum hourly wage, then the “minimum hourly wage” job is a workfare job.
“Tax-payer subsidised profits for Tesco? No thanks.” About 90% of economists would disagree with your suggestion that there is something wrong with letting private employers make use of subsidised labour. A large majority of the myriad of employment subsidies we have had since WWII have been available to both public and private sectors.
“Why not be more ambitious and organise 'jobs guarantee' workers into state/local authority-owned businesses or cooperatives to address identified developmental needs?” I’m 99% certain that the average local authority can cope with thousands of unskilled youths. Employing the unskilled is not easy, and the private sector is better at doing it that the public sector: i.e. the public sector has higher skill requirements than the private sector.
Moreover, the evidence is that the post subsidised employment jobs record of those who have done subsidised private sector work is better than those who have done public sector work. See:
http://ideas.repec.org/p/iza/izadps/dp606.html and
http://ideas.repec.org/p/iza/izadps/dp154.html
“It has to . . . not undermine the existing workforce.” I’m sure we’re all agreed on that. But how specifically are you going to avoid such “undermining”? I’ve set out some specific ideas on that point here:
http://mpra.ub.uni-muenchen.de/19094/
Briefly: if subsidised employees stay with a given employer for a relatively short period, that will dissuade the employer from using subsidised employees as substitutes for regular employees.
"So they had full employment in Russia and Eastern Europe during their “non-free market" period"
Ralph, this doesn't actually address the point about the free market. The fact that Chicken pox and Flu make you ill is not an analysis of Chicken pox now is it.
"Well that scheme isn’t aimed at the long term unemployed. It’s aimed at the disadvantaged and disabled: a different problem."
If you read on Ralph you will see that the author makes the point that this is likely to favour the privileged rather than the disadvantaged.
"About 90% of economists would disagree with your suggestion that there is something wrong with letting private employers make use of subsidised labour."
I need the poll results please. Even so at least let us call it welfare for the rich, just so we can cut the jargonistic bullshit. Let us say that 90% of economists believe in welfare for the rich.
"Employing the unskilled is not easy"
The state need to skill them up I would say, the New Deal managed it during a deep economic crisis, if it could be done then I guess it is possible now.
Boffy, aye, employment and unemployment are dynamic things. Sadly, too many policy makers think they are static. When jobs were "plentiful" during last decade's boom, the persistence of mass unemployment acted as grist to the scrounger mill. There was no understanding that what the stats captured was movement in and out of jobs.
I think anonymous has done a good job replying to you, Ralph. As far as I can tell, like most economists, you're offering technocratic solutions to an issue you see as an economic problem. The point is mass unemployment is a *political* matter and should be treated as such.
My critique of work experience/workfare schemes is predicated on encouraging social change where the sovereignty of capital is rolled back.
Anon,
1. Re your first two paragraphs, my point about free markets was not an attempt at any sort of detailed analysis of free markets or why they fail to bring full employment. My point was that since centrally planned economies are not a whole lot better at bringing full employment than free market economics, mentioning free markets is pretty irrelevant. If you’re discussing the fuel efficiency of cars, and different makes of cars are equally fuel efficient, then there is no point in mentioning Ford, GM, Toyota, or any other specific make.
2. Re your 3rd and 4th paragraphs, and the “wage incentive” scheme, I notice that Spence Thompson of IPPR does not actually cite any EVIDENCE that the scheme is not working. But clearly if the scheme does not do what it says on the label, then the scheme needs re-thinking.
3. Re your 5th and 6th paragraphs and directing employment subsidies to private vis a vis public sectors, I don’t know of any poll into the views of economists on this subject. But certainly all the subsidies directed at high unemployment regions since WWII have been aimed primarily at the private sector. Selective Employment Tax, if anything, benefited the private sector at the expense of the public sector in that SET subsidised manufacturing at the expense of services. Plus I don’t recollect the authors of the various works I cite in the link below having any big objections to employment subsidies aimed at the private sector.
http://ralphanomics.blogspot.co.uk/2012/01/effect-of-temporary-subsidised.html
Re your “welfare for the rich” point, as you will know if you’ve studied economics, a subsidy does not ultimately confer any great benefits on the INITIAL RECIPIENT of the subsidy (and nor does a tax ultimately do much harm to the person or entity that pays the tax). Reason is that market forces just distribute the costs of the tax (or benefits of the subsidy) to the “initial recipient’s” suppliers, customers, etc etc. E.g. the whiskey distilling industry is very heavily taxed, but that does not ruin whiskey distillers: they just pass on the cost to their customers. Likewise, subsidies get passed on.
Re employing the unskilled, you claim “The state need to skill them up I would say, the New Deal managed it…”. First, even if we DOUBLE what we spend on training, it will presumably remain true that the public sector has higher skill requirements than the private sector. Thus the idea in the above article that local authorities should employ loads of RELATIVELY unskilled people still looks like a non-starter to me.
Second, there is evidence in one of the studies mentioned in the above link that the sort of training offered by New Deal type schemes is not much use. That’s Nos. 1 and/or 2, and 4. Those studies found that “learning by doing” in the form of subsidised PRIVATE SECTOR work produced better results than formal training.
Phil,
I apologise profusely for being “technocratic”: i.e. spending hundreds of hours actually looking at the EVIDENCE as to what employment or training schemes work and which don’t. I’ve done that because I’m concerned to reduce unemployment, and to spend money on training in ways that produce results. Silly me.
I realised long ago that sociologists make a big show of being concerned for the less well, while often they’re more into making empty political gestures like “rolling back the sovereignty of capital”.
Ralph, my point had nothing to do with the "hundreds of hours" you spend staring at spreadsheets and everything to do with the perspective you're coming from. Politics without evidence is useless, but letting the facts "speak for themselves" is equally nonsensical. The first rule of any kind of social scientific investigation, whether economics or sociology, is there is no such thing as "neutrality". So for all your no doubt exacting and rigorous work in training schemes, that in and of itself does not address the basic problem: lack of jobs.
Also, perhaps you might be interested to know that I am not an academic. I work with some of the poorest and most vulnerable people in Stoke-on-Trent. I have to deal with the mess and damage government policy causes every single day.
What is your beef with the Future Jobs Fund? It worked pretty well and the person I know best who was on it certainly didn't work at Tesco.
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