Mini-jobs: Will they help?

A new legal category of work might help people into unemployment.

The creation of "mini-jobs", which allow people to take on work without paying tax or national insurance, is being considered by the Treasury as one of a package of measures to make it easier to create employment.

The idea – being promoted by some influential Conservative MPs – is modelled on a scheme in Germany, in which employees can earn up to €400 a month (about £314) without giving up any of their salary, and employers pay only a flat rate to cover pensions, social insurance and wage taxes, making administration simpler.

People can hold several mini-jobs up to the €400 a month tax-free limit, with the only impact on their income being the reduction of unemployment benefit over a certain threshold. Between €400 and €800, workers pay tax on a sliding scale.

As discussed in an ex-ante appraisal of Germany’s 2003 mini-jobs reform by the DIW Berlin, the plan is essentially a subsidy on low earnings so as to increase employment in low wage markets and to ease the long-term unemployed into the labour market.

Firstly, on the supply side, it is argued that welfare recipients are unlikely to enter the labour force when the already low wages they have access to are further depressed by social security contributions. Secondly, on the demand side, DIW argue that:

Given limited downward wage flexibility in the low wage sector due to binding minimum wages, SSC have to be borne at least partially by the employer of low-skilled workers, thus reducing their employment.

The Free Enterprise Institute, which has spearheaded the appeal for "mini-jobs" in the UK, has praised the German reform for lowering youth unemployment, increasing turnover in the jobs market, and increasing temporary work by two per cent in ten years. The report goes on to lament the fact that temporary workers account for just six per cent of the UK labour force, in contrast to Germany’s 15 per cent.

While the merits of increasing temporary employment are at best contentious, German commentators have criticised the mini-jobs model for creating "a massive disincentive for the unemployed".

Rather than bridging the gap between the labour market and the marginalised, they argue, mini-jobs have further ostracised the peripheries of the labour force by trapping them in low-wage jobs that offer no margin for progression. It is held that the subsidies, by inflating the value of low-wage jobs (as is intended) will lead people to substitute longer-term, more stable sources of income with mini-jobs. This, one can argue, while soothing unemployment in the short run, can have hazardous effects for income inequality, as well as stifle the development of a skilled labour force. Similarly, employers will be encouraged to fragment existing full-time jobs into series of mini jobs, thus extending the potential evils of the reform beyond those that are currently excluded from the labour market.

Consequently, the subsidy (as predicted by the aforementioned DIW paper) may reduce tax revenue without actually reducing welfare subsidies. This is confirmed by Johannes Jakob of the Federation of German Unions, who contends that the most viable option consists in combining welfare with a tax-free mini-job.

While the initiative may induce some people to temporarily seek employment, it is likely that mini-jobs will prove an expensive and structurally venomous distortion of the labour market.

John Lennon in a Mini Cooper. Well how would you illustrate mini jobs? Photograph: Getty Images
Photo: Getty
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Saudi Arabia is a brutal and extremist dictatorship – so why are we selling it arms?

With conflict in Yemen continuing, it’s clear that we’re failing to moderate the actions of “our despots”.

This year, during Pride week, I noticed something curious on top of the Ministry of Defence just off Whitehall. At the tip of the building’s flagpole hung the rainbow flag – a symbol of liberation for LGBTIQ people and, traditionally, a sign of defiance, too.

I was delighted to see it, and yet it also struck me as surprising that the governmental headquarters of our military would fly such a flag. Not only because of the forces’ history of homophobia, but more strikingly to me because of the closeness of our military establishment to regimes such as Saudi Arabia, where homosexuality is a sin punishable by jail, lashing and even death

That relationship has been under the spotlight recently. Ministers writhed and squirmed to avoid making public a report that’s widely expected to reveal that funding for extremism in Britain has come from Saudi Arabia. The pressure peaked last week, after a series of parliamentary questions I tabled, when survivors of 9/11 wrote to Theresa May asking her to make the report public. At the final PMQs of the parliamentary term last week, I again pressed May on the issue, but like so many prime ministers before her, she brushed aside my questioning on the link between British arms sales and the refusal to expose information that might embarrass the Riyadh regime. 

The British government’s cosy relationship with Riyadh and our habit of selling weapons to authoritarian regimes is “justified" in a number of ways. Firstly, ministers like to repeat familiar lines about protecting British industry, suggesting that the military industrial complex is central to our country’s economic success.

It is true to say that we make a lot of money from selling weapons to Saudi Arabia – indeed figures released over the weekend by the Campaign Against Arms Trade revealed that the government authorised exports including £263m-worth of combat aircraft components to the Saudi air force, and £4m of bombs and missiles in the six months from October 2016.

Though those numbers are high, arms exports is not a jobs-rich industry and only 0.2 per cent of the British workforce is actually employed in the sector. And let’s just be clear – there simply is no moral justification for employing people to build bombs which are likely to be used to slaughter civilians. 

Ministers also justify friendship and arms sales to dictators as part of a foreign policy strategy. They may be despots, but they are “our despots”. The truth, however, is that such deals simply aren’t necessary for a relationship of equals. As my colleague Baroness Jones said recently in the House of Lords:

"As a politician, I understand that we sometimes have to work with some very unpleasant people and we have to sit down with them and negotiate with them. We might loathe them, but we have to keep a dialogue going. However, we do not have to sell them arms. Saudi Arabia is a brutal dictatorship. It is one of the world’s worst Governments in terms of human rights abuses. We should not be selling it arms.”

With Saudi Arabia’s offensive against targets in Yemen continuing, and with UN experts saying the attacks are breaching international law, it’s clear that we’re failing to moderate the actions of "our despots".

The government’s intransigence on this issue – despite the overwhelming moral argument – is astonishing. But it appears that the tide may be turning. In a recent survey, a significant majority of the public backed a ban on arms sales to Saudi Arabia and just this weekend the Mayor of London denounced the arms fair planned in the capital later this year. When the government refused to make the terror funding report public, there was near-universal condemnation from the opposition parties. On this issue, like so many others, the Tories are increasingly isolated and potentially weak.

Read more: How did the High Court decide weapon sales to Saudi Arabia are lawful?

The arms industry exists at the nexus between our country’s industrial and foreign policies. To change course we need to accept a different direction in both policy areas. That’s why I believe that we should accompany the end of arms exports to repressive regimes with a 21st century industrial policy which turns jobs in the industry into employment for the future. Imagine if the expertise of those currently building components for Saudi weaponry was turned towards finding solutions for the greatest foreign policy challenge we face: climate change. 

The future of the British military industrial establishment’s iron grip over government is now in question, and the answers we find will define this country for a generation. Do we stamp our influence on the world by putting our arm around the head-choppers of Riyadh and elsewhere, or do we forge a genuinely independent foreign policy that projects peace around the world – and puts the safety of British people at its core?

Caroline Lucas is the MP for Brighton Pavilion.