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Pinning Down Miliband

1.6 million. I’ll say that again: 1.6 million. That’s roughly how many more people there are in work than at the last election, bringing the total up to a record-breaking 30.6 million. And it’s only likely to increase as our recovering economy becomes a properly recovered one. The Office for Budget Responsibility has employment levels rising for as far as its forecasts stretch.

Which must make Ed Miliband quite queasy. What’s a Labour leader to do against such good news? Congratulate the gosh-darn Conservatives?!

The answer is that he’s chosen to continue many of the attacks he made when, around 2011, the jobs figures weren’t quite so buoyant. He hones in on the negatives. Employment levels may be rising, he admits, but it’s not always the right sort of employment. We saw an example of this from Labour’s Rachel Reeves only yesterday. She leapt on TUC figures suggesting that thousands of people are “under-employed”, and held them aloft like a banner. “David Cameron’s failure to tackle under-employment,” quoth the shadow work and pensions secretary, “has left millions of people stuck in part-time jobs unable to get the hours of work they want.”

This may seem like a cheap shot, but it’s also a sort of philosophical difference between the Labour and Tory leaderships. For Miliband & Co., the growth in part-time work – there are almost half-a-million more part-timers than at the last election – is representative of the “cost of living crisis”, with people having to make do with less. For Cameron & Co., these jobs are welcome as jobs in themselves. Indeed, whenever I used to raise the point with people around George Osborne, they’d say that getting people into employment – whether it’s part-time, voluntary, or even political blogging – is the most important step. The rest will follow from there.

In truth, both viewpoints are valid. I’ve always reckoned that politicians should look beyond the statistical canopy layer and into the tangled undergrowth; and Miliband’s right, there are causes for concern in the jobs figures. But it’s also true that many of those causes for concern are diminishing with time and economic growth. I’ve written a series of posts on this theme, so I hope you don’t mind me just linking to them here. The jobs recovery…

And there’s another item I should add to the list: youth unemployment is now declining quite rapidly.

Perhaps this is why Miliband, for all his caveats and cavils, doesn’t have much to contribute by way of jobs policies. Or perhaps that’s just Miliband being Miliband. Either way, Labour’s insistent refrain that they will “make work pay” amounts to two policies in particular:

  1. A tax break for firms that pay their workers a “living wage”.
  2. A “jobs guarantee” of six months of work for any 18 to 24-year-olds who have been unemployed for a year, or for any adult who has been unemployed for two years.

The first of these is rather straightforward. Labour would – for one year only, if I understand it correctly – reimburse firms a third of the cost of upgrading their wages to living wages. What’s the catch of such a pleasant-sounding, tax-cutting policy? Nothing specific, although I’d be wary of Miliband’s claim that the policy would pay for itself by reducing the benefits bill and increasing overall tax revenues. That sounds like typically wishful maths from a party in Opposition.

The “jobs guarantee” is a little more complicated. Labour say that they’ve been here before, with the Future Jobs Fund that they introduced in October 2009 and that the Coalition terminated in March 2011. This scheme did pretty much what the new one would: it subsidised six months’ worth of work or training for any young person who had been unemployed for half-a-year. And, what’s more, there’s evidence to suggest that it was quite successful on its own terms. A DWP assessment concluded – albeit with heavy caution – that:

“At 104 weeks following the start of their FJF job, participants were less likely to be in receipt of welfare support by 7 percentage points (or 16 per cent less likely) and more likely to be in unsubsidised employment by 11 percentage points (or 27 per cent more likely) per participant than they would have been had they not participated.”

Jonathan Portes summarises that report’s other conclusions here.         

But there are a couple of differences between then and now. The first is that, as part of an exaggerated effort to sound tough on benefits, Labour have made their new scheme compulsory: either claimants sign-up or they’ll get less from signing on. The Future Jobs Fund was voluntary. This means that the figures are unlikely to be as good the second time around. The group of participants won’t just be keen beans who put themselves forward for work.

The second difference is the general climate. The Future Jobs Fund was introduced at a time of recession. It placed around 105,000 people in (at least temporary) work over one-and-half years, at an overall cost to the Exchequer of about £3,100 per person. But, now that the economy’s recovering, youth unemployment declined by practically the same amount between the last two quarters alone. And that’s without any cost to the state. The issue isn’t really how Miliband will pay for his “jobs guarantee” – a tax on bankers’ bonuses, as per – it’s more about whether it’s the right policy in the first place.

This isn’t to downplay the horror of youth unemployment. 767,000, the current level, is still tragically high. But what will Miliband deliver? One concern is that he’ll end up satisfying his guarantee by putting young people into cobbled-together public sector jobs, thereby pushing up the cost to the Exchequer in the long run. He insists, with scant proof, that 80 per cent of the jobs will be in the private sector. But the experience of the Future Jobs Fund was that, in the words of the DWP report, “the majority of FJF employers were from the public sector”.

The best we can hope is that, in the event of a Labour government, the economy has already improved to the extent that Miliband’s “jobs guarantee” is a marginal policy; that youth unemployment is no longer such a bane. But this is the nub of it. Labour’s employment plans rest on their wider policies for the economy. It rests on their policies for welfare, businesses and the public finances. We have already dealt with these – here, here and here – in our Pinning Down Miliband series. Sadly, none of makes for encouraging reading.

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