PR summits can’t mask a return to 1980s scale unemployment

by Michael Dugher

As expected, figures released today show that unemployment has risen again. It now stands at over 2.6 million – up 129,000 on the quarter and a 17 year high. Aware that more bad figures were on the way, David Cameron has arranged a “business breakfast” to “discuss youth unemployment” at Downing Street. And over at the department for business, innovation and skills, Vince Cable is to hold an “apprenticeship summit” for the TV cameras. But with the economy continuing to flat-line, for the now over 1 million young people out of work, gimmicky breakfasts and PR summits for the media are not enough.

Rising unemployment is an inevitable consequence of the lack of growth in the economy. And as yesterday’s OECD report highlighted, the UK slowdown happened well before the latest crisis in the Euro zone. Today’s jobless numbers mean that more than ever we need a real plan for jobs and growth.

As the shadow chancellor, Ed Balls, has set out, there are five clear steps the government can take immediately. First, a £2 billion tax on bank bonuses would fund 100,000 jobs for young people. Second, bringing forward long-term investment projects would help get people back to work and strengthen our economy. Third, reversing January’s damaging VAT rise would help high streets as well as struggling families. Fourth, a one year cut in VAT to 5% on home improvements would help homeowners and small businesses. And finally, a one year national insurance tax break, for every small firm which takes on extra workers, would help small businesses grow and create jobs.

If the government fails to take these steps, unemployment will keep on rising with serious long-term consequences. On Monday, a report from the chartered institute of personnel and development warned of a “slow and painful employment contraction” in the months ahead. Long-term unemployment is already at a 15 year high, and one of the most worrying aspects of today’s figures is the number of people who have been looking for work for more than a year. This is expected to increase further with more and more people becoming detached from the labour market over the next few years.

All of this is extremely worrying.  The longer people spend on benefits, the harder it is for them to adjust to the world of work. We know from the past that long periods out of work can have a devastating impact on people’s health, motivation and confidence.  This is particularly concerning for the generation of young people currently leaving school, college or university. In my constituency, the number of 16 to 24 year olds on job seeker’s allowance has increased by over 11 per cent in just 12 months. History shows that if these people don’t manage to find work soon, they risk facing a lifetime of failing to achieve their potential.

But as well as starting to create jobs, the government also needs to do more to promote work. Research shows that once someone has been in steady work for more than six months, they pick up a good work ethic and the chances of them later returning to benefits are significantly reduced.

In government, Labour understood this and made it a key priority. The future jobs fund, for example, gave young people the opportunity to get used to working whilst improving their employability.

In Barnsley, I know that the fund helped promote a culture of work among the young people involved, and it encouraged businesses to hire from within the community. The government should have kept the future jobs fund as well as Labour’s youth guarantee – which guaranteed a job or training place for young people out of work for six months and, just as importantly, their benefits would be cut at ten months if they refused to take part.

Developing a culture of work is also vital for the older long-term unemployed. I have seen time and time again in Barnsley how an unsuccessful attempt at re-entering employment can hit confidence and delay the day when they are able to return to work.

Research has shown that programmes like the future jobs fund helped to “de-risk” the long-term unemployed for future employers and save money for the tax-payer in the long-term. This is why increasing opportunities for work experience and real apprenticeships is so important – an area where the government can and should be doing more.

The number of available apprenticeships increased by over 200,000 from 1997 to 2010.  Despite claims that the number of apprenticeships has risen in the last 12 months, leaked documents from the department of work and pensions revealed that many of these “new” positions are simply “phantom apprenticeships” that are just re-classified existing jobs.

The truth is that there are nowhere near enough apprenticeship places. It is currently less competitive to get into Oxford than it is to get an apprenticeship. And only 15 per cent of apprenticeships over the last year went to people under the age of 25. Vince Cable will announce today that the government plans to encourage small companies to take on their first apprentice with a £1,500 incentive payment. But this small measure shows how this out of touch government does not understand the scale of the crisis and the fact that one in five people are currently looking for work.

The government claims that their work programme will end long-term unemployment by offering structured and specialised support to people looking for work. Yet a long list of charities and organisations have shown how hollow this claim is.

The work foundation has warned that the way private contractors will be used to operate the work programme will mean that people in deprived areas will get little help. The contractors will be paid based on the number of people they get in to work. This means that they have no incentive to help people who have been out of work for a long time or who live in areas with few jobs.

At the same time, the centre for economic and social inclusion and the age and employment network have warned that private contractors will have no financial incentive to invest in and help older people and those individuals who are unemployed due to complex social problems. In other words, the work programme will likely fail to help the very people who need help to get back to work the most.

Long-term unemployment in the 1980s led to dejection, alienation and a lost generation – the subject of grim TV dramas and dark comedy. In areas like my own, the 1980s was a period that scarred people’s lives for decades. Today’s figures are once again a grim reminder that without a plan for jobs and growth, those days may be returning once more – with our young people bearing the brunt.

Michael Dugher is Labour MP for Barnsley East and shadow minister without portfolio.

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4 Responses to “PR summits can’t mask a return to 1980s scale unemployment”

  1. doshler says:

    blame the unions, pushing up wages, pensions, styming growth, blocking young out jobs market

  2. swatantra says:

    We are moving from the free market into the even more stressful payment by results as the public sector contracts further and further. Youngsters will know of no oher way of working. Older hands will have to adapt.

  3. Robin Thorpe says:

    How about a one year cut in NICS for both employees and employers for people under 25? I appreciate that this will result in a drop in revenue for Whitehall but as this age group is relatively poorly paid the impact shouldn’t be too high and is definitely an incentive for employers. My own sketchy estimate is that it would cost the govt £4.6billion, but if if gets young people into jobs it will save them money too (500,000 young people employed = saving of £1.82billion in JSA payments) and puts an extra £1000ish back into the pockets of young people who will spend it.

    I like the proposal of a VAT cut for home improvements too; lots of jobs are in small builders/associated trades. I’ve an architect friend who’s been out of work for 6 months. 2 years ago there weren’t enough architects to go around, now the work is drying up.

    The biggest impact could be made by tightening the enforcement of tax rules; unfortunately cuts to HMRC will result in less enforcement.

  4. Madasafish says:

    It is going to get a lot worse in my view. The Eurozone at best will have minimal growth for 5 years.. at worst a major recession..
    We have an economy blighted by labour inflexibility, an education system helping to produce largely unemployable people and a benefits culture which discourages work.

    As a result 80% of all new jobs are filled by immigrants.. (FACT for year 1 of the Coalition .. check it out).

    Anyone who thinks a little tweaking and more of the same is the solution is living in wonderland…

    Until the proposed solutions fit the facts, politicians are not worth reading.

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