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Friday, 14 March 2014

Another scheme, fiddling with a long term problem.

Labour to pledge a job for every young person out of work for a year

Labour Pledges Jobs Guarantee Extension for 50,000 Long-Term Young Unemployed


The Labour Party of 2014, follows in the wake of the Labour Party of the last 25 years. There is, and has been for decades, a fundamental flaw in the philosophy and policies of a party which addresses the problem of unemployment generally and, in this instance youth unemployment in particular, with the myth that says we can use taxpayers money (no matter from where such tax money may be sourced), to provide employers with a source of "free" labour and then claim that the government is doing a grand job of providing opportunities and reducing unemployment figures.The reality of course is that the government, be it Labour, Tory or Coalition, is doing nothing of the sort.
Schemes have come and gone over the years. From YOPS through a hundred and one other schemes each has been a variation of one common feature. The government hands money in one way or another, to companies (employers) in exchange for the employer to provide a place within the company, for an unemployed person for a given period of time. at the end of the period, it is hoped that the employer will provide a full time position and take the person onto the company payroll.
So it is with this latest proposal from Ed Balls and the Labour party. 
Essentially, the "new " scheme would provide starter jobs for more than 50,000 young people who have been left on the dole for over a year and pay the wage and employer’s National Insurance contribution for 25 hours a week for six months at the national minimum wage, and also would give the employee £500 towards training and administration costs. The whole programme would be funded in the first year by a tax on bankers’ bonuses to raise between £1.5 billion and £2 billion. A fine sounding scheme with laudable objectives but with the same flaws as all the other schemes over the years. It is a sticking plaster to fix a broken leg, and a not very sticky sticking plaster at that. It is another attractive myth, bathed in shallow rhetoric,which fails to address the fundamental problem.
If the objective is to return people to full time employment (as it should be), it is necessary for government to provide real employment opportunities and not just provide employers with a pool of "free labour" for a limited period of time. True that the "unemployment figures will show a reduction which the press and media will hail as a great triumph, but in reality, all that is happening is that money paid out and labeled as "unemployment" benefit will be relabeled as "wages and NI contributions" for those on the "new scheme". This is economic lunacy, masquerading as tackling long term unemployment. The fact that unemployed 18-24 year-olds and adults aged 25 and over would lose their Jobseeker’s Allowance if they refused to take up the job offer, leaves a rather sour taste.
Government should be creating capital expenditure programes which can be started almost immediately and thereby provide real jobs generating income tax revenues, NI contributions and stimulating demand withing the economy, in addition to producing the assets created by the programme. The building of social housing projects and civic amenities are classic examples of providing real work as well as fulfilling a recognised requirement in society. The management of demand within the economy is an economic essential which the Labour party have abandoned in their pursuit of variations to basically conservative policy.
Ironically, Labour have thrown out everything that once identified them as a progressive party seeking to improve conditions and standards for ordinary people and their families, and adopted a bizarre ideology which seems to believe that they can manage a Tory economy better that the Tories can and that their understanding of "supply side" economics is the revealed truth.
The sooner that Labour, or some other as yet to be established political group, proposes an economy recognising that aggregate demand is the key to economic recovery and growth, the better this country's prospects will be.
There is little if any evidence that Ed Balls or anyone else in the current Labour party, has either the vision or the political will to address the real problem. In fact, it seems to me that the vast majority of the Labour Party and its policy guru's would be more at home politically and intellectually, sitting somewhere between the Tory left and the Liberal Democrat right.