When is a Job Guarantee not a Job Guarantee?

The Labour Party’s new ‘job guarantee’ idea is getting a lot of coverage this morning, but is it any good? They are proposing to introduce a guaranteed minimum wage job offer to those aged over 24 who have been claiming Jobseeker’s Allowance (JSA) for more than two years. If the claimant turns down the job offer, they risk losing their benefits. Currently, there around 130,000 people who fall into this category. The jobs will be for a 6 month duration, after which the individual will have to find work elsewhere, or go back on benefits.

First then, the positives. By proposing this, Labour are tacitly accepting that even in the good times, there will always be some people left behind, meaning Government does have an active role to play in the Labour market. Once this principle is established, perhaps we could move to something more ambitious. It also get the issue of long term unemployment back on the map, and puts pressure on the Government to respond given the current failure of the Work Programme.

That’s where I run out of positives though I’m afraid. I think if you set out the design the weakest possible job guarantee scheme that had the least impact upon the economy, this would probably be it. Labour’s proposal is very similar to something the IPPR have been proposing for a while, only even less ambitious. I briefly mentioned that here, although I was probably a little too positive about it. The IPPR want the job offer to be made at 12 months rather than 2 years, but other than that it pretty much the same as what Labour is proposing.

I have a number of issues with this idea and the way it’s being presented. Here are the main ones.

  • It only applies to those who have been unemployed for over 2 years. This is less than 10% of those claiming JSA, and an even lower proportion when measured against all those out of work who want a job. So the impact on the economy would be negligible.
  • The guaranteed jobs would only be for a 6 month duration – probably not long enough to give someone the skills and experience to make a smooth transition to better paid work.
  • The way this is being presented is that there is a need to be tough with those who are long-term unemployed. You need to force people to work on threat of losing their benefits. The evidence just doesn’t bear this out. Research undertaken recently by the Joseph Rowntree Foundation found an almost universal “commitment to conventional values about work”. JSA is already conditional upon the individual actively seeking work. No further sticks are necessary.
  • The proposed scheme would apparently cost £1bn and be ‘paid for’ by restricting pension relief for high income pensioners. The tax relief restrictions may be sensible and fair, so may be worth doing on its own merits, but it has nothing to do with paying for anything. This idea that every policy proposal must be ‘fiscally neutral’ is very damaging as it severely limits the effectiveness of any spending programme.

So what would a job guarantee worthy of the name look like? Here’s some features it might have:

  • Job offer at 3 months or less
  • Jobs last for an indefinite period
  • All jobs come with training
  • Paid at a living wage
  • Genuinely full time work available, but with flexible and part time hours for single mothers, those with health issues etc.
  • Optional, i.e. the person can choose to remain on benefits and seek their own job (subject to Jobseeker’s agreements as now)

I’ve expanded on the my preferred type of job guarantee here and here.

To sum up then, while Labour are calling their idea a job guarantee, it is a million miles away from what a true job guarantee would look like. It lacks ambition, scope and retains the nasty undertones of the current climate – not wanting to appear to be soft on ‘scroungers’. To me it represents a step back from Labour’s last foray into job creation schemes – the Future Jobs Fund. That was also quite timid, but remained optional, people had a fair amount of choice about what jobs they applied for and the ethos of ‘community benefit’ was a good one. This new idea junks the first two principles and weakens the third. In short, not great. Another ‘big announcement’ that turns out to be anything but.

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8 thoughts on “When is a Job Guarantee not a Job Guarantee?

  1. Great post, Alex. What strikes me most about these schemes is that the Parties can’t guarantee anythng if they have not made the economic climate conducive to employment – that’s want I want Labour to describe. If they concentrated on that, they wouldn’t need a scheme at all and could concentrate on providing stepping stone courses for those few who genuinely need specialist help… 🙂

    1. I think that’s right. With the right mix of spending and taxes, unemployment would be much lower than now, so the intervention necessary to generate full employment would be more modest.

  2. Well yes, but… when Reuters are reporting British firms are getting even larger profits but are paying even less in taxes http://uk.reuters.com/article/2012/12/27/uk-exclusive-tax-idUKLNE8BQ00220121227 and it’s costing tens of billions a year, why are we even discussing the piddling few quid involved in back to work programmes? Why aren’t we saying to Balls “Forget all that, it’s just not important in the scheme of things, what are you doing about the tax dodgers?” Balls and Osborne’s big success is we’re not discussing the important issues, instead we’re all getting hung up with the trifling ones.

    1. I think unemployment is a pretty important issue, although Labour are proposing to aim at peashooter at the problem rather than a bazooka. Doing think ‘going after tax dodgers’ is the best approach. It’s the tax system as a whole that is to blame, not individuals. There’s no quick fix by hiring more tax inspectors. The law needs to change.

      1. Precisely, and where are their proposals to do anything remotely like that? Instead we get this useless Tory-Lite nonsense. Balls makes it plain the country can expect no help from Labour.

  3. Providing job guarantees is all well and good. But where do you anticipate these ‘jobs’ coming from? In your linked posts you make vague mentions of jobs coming from the voluntary sector or government sector etc. But that doesn’t feel like an answer which would support spending billions of pounds paying people. In fact, between a rubbish job and the dole, the dole maybe the better answer.

    1. Hi Rahul

      Are you in the UK? Back in 09/10 we had the Future Jobs Fund, which very easily created over 100,000 jobs in local government and the voluntary sector. They were not rubbish jobs (although poorly paid), providing training and worthwhile work experience. I’m pretty confident this could be scaled up easily with a bit of imagination and political will. Challenging yes, but possible? Absolutely!

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