June 16, 2020 - 10:58am
Today’s unemployment numbers may seem reassuring, and show that the furlough scheme is working: the headline measure of unemployment was unchanged for now.
But the day also showed us what’s about to hit in the coming months. A record drop in job vacancies and self-employment. The unemployment benefit claimant count soaring from 1.2 million people in March to 2.8 million now. These are the first signs of an unprecedented economic storm.
Early 1980s levels of unemployment could be back soon. Shops and hospitality, normally employing a large amount of young people, are going to struggle to back on their feet. GDP has plunged back to where it was in 2002.
Rishi Sunak has had a good crisis, shredding Treasury orthodoxy with schemes for the government to pay people’s wages. But things are only going get tougher from here.
There’s a thousand things we need to do to fight the recession, but above all we have got to fight to get unemployment down.
In previous recessions we had schemes to help young people get jobs: the “YTS”, the “New Deal”, etc. In a “normal” recession, the evidence suggests focusing such schemes on matching people to jobs, getting them work experience, and so on.
But in a cluster-recession of this magnitude, we need more.
One lesson I take from previous jobs schemes is that you need a backstop. You need a block of jobs government can place people in, to guarantee hope to people who don’t find work after months of trying.
Economists are pretty clear that long-term unemployment has a sort of “scarring” effect. People on the dole get de-skilled, detached, and their mental health suffers. Years later they are still earning less than similar people who weren’t unemployed. There’s even evidence their kids earn less.
If this storm is as bad for unemployment as it looks, we need the government to create useful work. Now is the time to put long-held national missions into practise.
Let’s get an army of young people to eliminate the graffiti that disfigures this country.
Let’s tidy Britain until it looks like Switzerland, where you can eat your dinner off the pavement.
Let’s insulate thousands of houses… or turn National Citizen Service into something way bigger than it is… or plant trees. Take your pick.
The economics are clear and the politics I think are too. Last year’s election proved the concept, fusing centrist economics with sensible social conservatism and national self-confidence. In a tough spot, people are going to want an egalitarian kind of conservatism, long after the furlough scheme has ended.
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SubscribeThis is a good idea – other areas where we need many more people to be trained and employed are in caring, infrastructure maintenance (especially roads/paths) and horticulture Skills training (both ‘soft’ and ‘hard’) can be given alongside the work.
Better idea! Catch the criminals defacing property. Put them on chain-gangs cleaning up the defacement. Sleeping accommodations would be pup tents with a wool blanket. Chow would be beans three times a day.
The only thing that’s clear about this is that it’s nonsense, The ‘new deal’ only prolonged the depression and unemployment in the US, the more laissez faire policies of the UK government at the same time were more effective in reducing unemployment. The government can’t create useful work, if it was useful it wouldn’t need the government to create it
A lot of very useful work was done in the U.S. of the 1930s under the programmes instituted by the government. It wasn’t all just communist plays and socialist murals.
Crikey, this sounds like the type of proposal that someone might have made the Daily Telegraph circa 1974. Not gonna happen.
I like the idea of planting trees.
We could start in London, say Hyde Park, St James Park etc. -after all Londoner’s are very deprived of trees per person.
As I live outside London, with plenty of trees; I am not keen on people in London telling me I must have more.
Great piece by Neil! He looks back to the New Deal program in the US, but a more apposite American comparison would be with the Youth Incentive Entitlement.Pilot Projects (YIEPP) run by the US Department of Labor between 1977 and 1980 in places all over the US. These have been ably described by Judith Gueron in “Lessons from a Job Guarantee”. The objective of the programs was to reduce both youth unemployment rates and to keep young people in school and it succeeded well in both objectives. Given the current BLM focus, it is worth noting that 73% of participants were black, with whites (18%) and Hispanics (3%) accounting for most of the rest. I noticed from the comments it was assumed the young people would be working for the government, perhaps because the example of erasing graffiti would seem to require a government employer. However, Gueron notes that, in running the YIEPP: “The inclusion of private sector worksites contributed to the program’s ability to provide quality work experience positions. However, a high subsidy level is essential to induce substantial private sector co-operation.” It is really something for the UK to think about.