We can’t work it out

Another Government, another job creation scheme, another waste of time and money.

Last Friday saw the launch of the latest employment white elephant, “The Work Programme” charmingly described by Employment Minister Chris Grayling as,

“a giant employment dating agency”

The concept is to use private companies to find employment for unemployed people and incentivise them to do so with the payments for success ranging depending on how unemployable the placed people are.  There are a number of serious faults with the scheme, many of which have more than adequately been highlighted by my friends at the Work Foundation:

  • Unemployment has huge regionality – if you’re unemployed in an area of high unemployment then incentives to contractors to find you work are not going to help one iota
  • Unemployment has huge emotional, social and psychological implications. Trying to solve it through a commissioned based system is a recipe for disaster – expect to hear stories of vulnerable people being ill-advised and placed in roles that are unsuitable
  • Private enterprise will focus on where it can achieve a return, not where it can be most socially useful
  • The scheme is focussed on demand side, not supply side

And this last point is the real issue, the real area where this and other job schemes come crashing down.  Employers don’t (generally) create jobs because of Government schemes.  There may be some headline grabbing stories – generally from retailers creating part-time, low paid jobs. But that hardly deals with the issues that are driving the unemployment figures – such as tens of thousands of public sector workers losing their jobs.

If we are serious about creating meaningful sustainable employment, we need investment in the key market sectors that Britain can be strong in. We need to invest in the knowledge economy, in creative industries, in R&D. We need to learn the lessons from the financial crisis and incentivise the development of a mixed economy. But perhaps most importantly we need to understand that the burden of tax on businesses needs to be reduced.  Business creates jobs when they are growing and investing in their future, not when they are holding their own or at worst contracting.

There is no genuine, long-lasting value behind “job creation” schemes or incentives, they don’t lead to a step change in the labour market, they are political window dressing that hide the main issues of economic frailty. Within the UK, if we are serious about solving the current unemployment situation (and we should be as it is a 17 year high) then we  need to create an environment that supports business growth, entrepreneurialism and innovation.

At the same time, we need to address long-term skills shortages, through significant investment in retraining and finally to support business development in those communities that have been devastated through long-term unemployment and public sector cuts.

The “Work Programme” does nothing to tackle the crux of our unemployment problem. It is time to grow up and start discussing the real issues that lie at the heart of the matter, only then will we take any meaningful steps forward.