Labour’s “job guarantee” vital in fight against long term unemployment

The TUC propose that the job guarantee should be available to all adults who have been unemployed and claiming Jobseeker’s Allowance for more than 12 months.

Last Friday The Times ran a story suggesting Labour will be announcing a “job guarantee” for people who find themselves long-term unemployed.

Coincidentally, a coalition of labour market experts – the TUC, the Work Foundation, the Resolution Foundation, the Demos Open Left Project (headed up by former Secretary of State for Work and Pensions James Purnell) and Professors Paul Gregg and Richard Layard – had just written to current Work and Pensions Secretary Yvette Cooper with a similar suggestion.

As The Mirror and The Guardian report today, the coalition are calling for the Government to introduce a universal job guarantee as an integral part of the UK’s existing welfare to work infrastructure.

Our proposal is that the job guarantee would be available to all adults who have been unemployed and claiming Jobseeker’s Allowance for more than 12 months.

We believe that such a measure (which the Government has already made available for young people through the Future Jobs Fund) would make a real impact on levels of long-term unemployment, providing a promise to all unemployed people – especially to those in the areas devastated by the downturns of the 80s and 90s – that the Government will not allow a repeat of the years of worklessness these communities experienced in previous recessions.

The 1990s data makes the risks clear. The number of people out of work for at least 12 months continued to rise for 18 months after the UK’s last recession ended – the Office for National Statistics (ONS) shows that long-term unemployment peaked in Spring 1993, when 1,243,000 people had been unemployed for 12 months or more.

It also took six years from the end of that recession for levels of long-term unemployment to return to pre-recession levels. In the Spring of 1990 (before the recession started), 646,000 people had been out of work for this long, and it took until Autumn 1997 for long-term unemployment to return to a similar level (633,000).

It is certainly true that relative to GDP falls, unemployment has risen far less than in previous downturns – and this is at least partly attributable to increased Government investment in Jobcentre Plus and in particular in opportunities for young unemployed people.

But preventing long-term unemployment among all working-age adults is the next big policy challenge, as while the number of people experiencing periods of short-term unemployment has started to fall, the labour market statistics still show quarterly increases in the numbers out of work for long periods.

This is a result both of those who were already out of work when the recession started competing with newly unemployed people for fewer jobs, leaving the former group less likely to find work, and of the rise in unemployment that we have seen over the last year – those who have not yet found new positions are now passing the 12 month mark.

The negative impacts of long-term worklessness for individuals are well documented, including the increased likelihood of mental health problems, relationship breakdown, alcohol problems, debt and homelessness – all resulting from (and consequently contributing to) increasingly lower chances of moving back into employment.

Communities also suffer with high poverty levels, reduced local demand and consequent poor levels of job creation. As well as the moral imperative for action, policy that reduces the prevalence of long-term unemployment is therefore a financially smart move – increasing future tax revenues and reducing benefit and public service expenditure.

There are strong evidence-based arguments in favour of job guarantees as a means to improve labour market outcomes for those who have been out of work for more than 12 months. For example, research evidence shows that badly designed “workfare” schemes are not very effective as they tend to keep participants out of the labour market, discouraging them from seeking work and increasing the chances of complete disengagement with welfare to work services.

In contrast, both employers and participants are likely to be more impressed by a period of employment with a job guarantee, and work experience provides participants with valuable evidence of job readiness, including attendance records and positive employer references (which are particularly important in lower-paid jobs).

Where job guarantee participants have sufficient time for effective jobsearch (with placements clearly focused on enabling participants to identify sustained work in the longer-term), work on tasks that are useful to the community and have full employment rights – including being paid at least the minimum wage – evidence shows that a universal job guarantee would be fairer and more effective than any of the available alternatives.

As Beveridge said, the only test of unemployment is the offer of a job – and job guarantees fill this gap. With our coalition partners, the TUC believe that making a universal job guarantee the cornerstone of provision for long-term unemployed people would offer a positive and supportive approach, as well as substantial social and economic gains.

The introduction of such a policy should be a priority for government in assessing where to allocate resources aimed at boosting employment.

Our guest writer is Nicola Smith, senior policy officer at the TUC

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