Friday 18 July 2014

On the causes of employment...


Chris Dillow, everyone's favourite cuddly Marxist, takes Tim Montgomerie to task over unemployment - or rather employment:

My chart shows that since the Tories took office, the number of unfilled vacancies has risen. What's happened is a move along the Beveridge curve, rather than an inward shift in it. This corroborates micro-level evidence that the Help to Work scheme had only small effects in getting people into employment.

The big story since 2010 is not that the unemployed have been filling vacancies faster but rather that there's been an increase in the demand for labour.

And this observation raises some interesting questions, not just about unemployment but about economic policy in general. The link in the quote above is to a commentary from NIESR about the effectiveness of the 'Work Programme', the current government's programme aimed at supporting the transition into work for the unemployed. We should note here that the 'Work Programme' was developed in response to the perceived failings of previous schemes both in terms of effectiveness and also value-for-money.

The implication of Chris's observation is that there is a disconnection between the micro- and macro-level policies. We know this is the case because the money paid to Work Programme providers is on the basis of results rather than activity commissioned in anticipation of targets being met (and we should note this is the central criticism of NIESR's research - it's findings were very early in the programme).

So money is paid to Work Programme contractors on the basis of actual people going into actual jobs - about 250,000 of them (although the permanence of these jobs is a matter of debate). Yet we are told that, in net terms, these programmes aren't effective and that it is factors in the whole economy - the relative price of labour, overall economic growth and so forth - that determine whether or not people leave unemployment for employment.

In fundamental terms what is being said here is that those expensive programmes aimed at supporting people into work are merely an indulgence - the economic policy equivalent of putting go-faster stripes on your Lada.  Except that on the proverbial front-line it simply doesn't feel that way. Even with the incentive of less cash benefits for many long-term unemployed it's pretty difficult to find and, just as importantly, keep work. To try and help everyone understand, I'm going to tell a couple of stories.

The first one is about the young man on a college-based construction training programme. This lad is on work experience at a site and, one morning, the site manager rings up the project worker and says that he keeps turning up late. The project worker thinks this odd - he's always come to college and was pretty reliable. So she goes to see him, as she put it, "to give him the hard word". It turns out that the problem is that the lad's father - also unemployed - doesn't want him to work because he thought it might affect his housing benefit. So the young man left his tools and overalls at a friend's house and, each morning, climbed out his bedroom window and over the back fence so his Dad didn't know he was working.

The second story was told by a programme manager on Manchester's Wythenshawe estate. This manager was curious as to why Wythenshawe had such a high level of male unemployment despite that fact that right next door is the North West's biggest generator of employment - Manchester Airport. So he went to see employers on and near the airport to ask why. And he discovered that the problem was pretty simple - most airport employers had strict security checks and something like two-thirds of the men on the estate had some form of criminal record. They would fall at the first hurdle.

I could relate more stories about the barriers put in the way of the long-term unemployed. I could talk about English Bob who was told to stop going out to get jobs for his fifteen-year-old bottom set pupils and to put them through an English exam he knew they would fail. Or the efforts of much maligned businesses like Poundland to employ people with learning difficulties. Everywhere you go you'll find people - in businesses, in charities, at schools and in public agencies - trying to find ways to get people into sustainable jobs.

And it's hard. Not just because there are few jobs - certainly jobs that suit - but because many of the long-term unemployed are stuck, or addicted or ill. Some really don't want to work at all. Yet when you see a lad off Seacroft who yesterday was cock-of-the-walk on the estate standing nervously twisting his baseball cap as he waits for an interview to go on a joinery course - then you know that the problem isn't 'don't care, won't care, don't want a job'. That lad has been given such a narrow horizon - dingy council flats, petty squabbles where violence is half-a-bottle of vodka away and a world outside that sees only anti-social behaviour, illiteracy and a bad attitude.

So if the Work Programme has got only 70,000 people off that heap and into real work - perhaps for the first time ever - I see that as something to celebrate not something to condemn as failure. I think of the barriers those unemployed people have crossed, I can hear the 'give him a go' conversations with employers and I can picture the frustration of good people as they try again and again to get some hopelessly unreliable person into a job.

Chris Dillow might be right when he says it's falling wages that lie behind the growth in UK employment. But he should also see the human stories too and remember that the micro- stuff matters. These programmes may not make a lot of difference at the aggregate level but down on the ground they provide, every day, a way out for people who might not have made it out on their own.


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