Show Hide image

The coalition isn’t working for the jobless

The government is ignoring the growing problem of youth unemployment — even as it fails to kick-star

I flew back to the United States just before Christmas, the day before Gatwick closed again. I got out just fine, but the flight I took, along with many others, was cancelled the next day. There was also chaos on the roads. If I recall correctly, the transport budget is going to be cut by 15 per cent in real terms, so things are surely going to get worse next year and the year after that and the year after that. What are a few potholes between friends?

At least there was good news from the US. Last month, in a rare show of bipartisanship, the House and Senate passed a big fiscal stimulus package, including cuts in payroll taxes. Plus, the Federal Reserve is doing more quantitative easing to help get unemployment down. In Britain, the latest data release on the labour market from the Office for National Statistics showed a big jump in autumn in the number of unemployed (up 35,000) and in the unemployment rate (from 7.7 per cent to 7.9 per cent). Unemployment rose to more than 2.5 million and was only 4,000 below the high point in the recession, in February 2010. Unemployment among women was at its highest since April 1988. The number of full-time jobs fell by an astounding 58,000.

Public-sector employment fell by 33,000 but private-sector employment stayed unchanged. It doesn't look like job creation in the private sector is going to make up for job destruction in the public sector.

Generation game

The adjacent chart suggests that the public believes that unemployment is on the rise and there are going to be fewer vacancies. It plots data from Nationwide's consumer confidence index, which asks respondents about what they think the employment situation will be six months ahead. It shows the percentage who say that there will be "not many/few jobs" available. This has risen sharply since May, when the coalition was formed.

Also plotted on the chart is data from the European Commission's consumer survey, which asks respondents what they think is going to happen to unemployment over the next 12 months. It is calculated as an index and has also risen sharply since the spring. The fear of unemployment is rising. Of particular concern is how, between August and September 2010 (the most recent data available), 81 per cent of the increase in overall unemployment was accounted for by youngsters under the age of 25: it was up 19,000 among 16-to-17-year-olds and 25,000 among 18-to-24-year-olds, out of a total increase of 54,000. Youth employment (ages 16-24) actually fell by 38,000.

blanchflower graph

In a paper I wrote with David Bell, published in the January 2011 edition of the National Institute Economic Review, we show that underemployment is especially prevalent among young people. Youngsters can't find jobs but when they do, these tend to be part-time rather than full-time; temporary rather than permanent; and often with fewer hours than they would like. They are also more likely than adults to be out of the labour force or inactive but to report that they want a job.

Once again, there is talk of a "lost generation" as youth unemployment heads inexorably towards the million mark – it is now at 943,000. Almost half the young people not in work surveyed for the latest Prince's Trust Youth Index claim that unemployment has caused them problems, including self-harm and insomnia. The survey, funded by the Macquarie Group Foundation and carried out by YouGov between 26 and 29 November 2010, showed that about one in six young people has found unemployment as stressful as a family breakdown, while more than one in ten claims that joblessness has given him or her nightmares.

The research, based on interviews with 2,170 16-to-25-year-olds, also shows how young people are twice as likely to self-harm or suffer panic attacks a year into unemployment. The charity's third annual youth index shows how those who are not in employment, education or training are less happy across all areas of their lives. More than half said that searching for work had left them feeling disillusioned or desperate.

Shamefully, the government is ignoring the problem of youth joblessness. The work programme it is about to launch is doomed to fail, as there are no jobs around, even if the government wants to pretend that there are. There are five unemployed people for every vacancy.

In response to a question on the increase in unemployment by the Labour leader, Ed Miliband, at Prime Minister's Questions on 15 December, David Cameron said: "While part of the figures are disappointing, they are mixed because we did see the claimant count has come down in the unemployment figures and also we are seeing an increase in the number of vacancies in our economy. Every day, there are another 10,000 vacancies. So, yes, we have got to get the private sector going, increase the number of jobs that are available." They sure do.

Pretty vacant

The claimant count, which excludes many of the unemployed, including all 16-to-17-year-olds, fell by a paltry 1,200. Cameron misspoke, as vacancies are not rising by 10,000 a day. Far from it. Over the quarter, they in fact grew by only 1,000. So, assuming there are about 91 days in every quarter, the number of vacancies grew by only 11 a day, not 10,000.

Anyway, this increase was driven primarily by a one-off increase in vacancies in the public sector. As is made clear in a note on page nine of the data release, the estimate for the three months to November 2010 includes vacancies for temporary jobs in connection with the 2011 census, which have been advertised by the Office for National Statistics since October 2010.

Excluding these census vacancies, there were 455,000 vacancies in the three months to November 2010, down 12,000 from the three months to August 2010, or 132 a day. Private-sector vacancies fell at a rate of 55 a day.

It doesn't look like the coalition government has got the private sector "going" yet. Net job creation in the private sector this quarter was zippo, zilch, nil, zero – that is, none at all. George Osborne's policies are not working.

David Blanchflower is a labour economist and a professor at Dartmouth College, New Hampshire, and the University of Stirling

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

This article first appeared in the 03 January 2011 issue of the New Statesman, The siege of Gaza

Getty Images.
Show Hide image

The Tories' aim is to put Labour out of business for good

Rather than merely winning again, the Conservatives are seeking to inflict permanent damage on the opposition. 

The Conservatives are numerically weak but politically strong – that is the peculiarity of their position. Their majority is the smallest of any single-party government since October 1974. Yet, to MPs at the Tory conference in Manchester, it felt like “2001 in reverse”: the year of Tony Blair’s second election victory. Then, as now, the opposition responded to defeat by selecting a leader, Iain Duncan Smith, who was immediately derided as unelectable. Just as Labour knew then that it would win in 2005, so the Conservatives believe that they have been gifted victory in 2020. David Cameron has predicted that the party’s vote share could rise from 37 per cent to a Thatcherite 43 per cent.

For Cameron and George Osborne, who entered parliament in 2001, this moment is revenge for New Labour’s electoral hegemony. They believe that by applying Blair’s lessons better than his internal successors, they can emulate his achievements. The former Labour prime minister once spoke of his party as “the political wing of the British people”. In Manchester, Cameron and Osborne displayed similarly imperial ambitions. They regard Jeremy Corbyn’s election as a chance to realign the political landscape permanently.

Seen from one perspective, the Tories underperformed on 7 May. They consistently led by roughly 20 points on the defining issues of the economy and leadership but defeated Labour by just 6.5 overall. It was their enduring reputation as the party of the plutocracy that produced this disparity. Those who voted for Labour in spite of their doubts about Ed Miliband and the party’s economic competence may not be similarly forgiving of Corbyn. To maximise their gains, however, the Tories need to minimise their weaknesses, rather than merely exploit Labour’s.

This process began at conference. At a dinner organised by the modernising group the Good Right, Duncan Smith, Michael Gove and the Scottish Tory leader, Ruth Davidson, affirmed their belief that, contrary to Thatcherite orthodoxy, inequality is a problem. Only the Business Secretary, Sajid Javid, an admirer of the libertarian heroine Ayn Rand, insisted that equality of opportunity was the defining metric.

George Osborne’s assured speech was most notable for his sustained appeal to Labour voters. Several opposition MPs told me how unsettled they were by the Chancellor’s declaration that Labour’s new leadership calls “anyone who believes in strong national defence, a market economy and the country living within its means” a Tory. He added, “It’s our job to make sure they’re absolutely right. Because we’re now the party of work, the only true party of labour.” The shadow minister Jonathan Reynolds told me: “We’ve got to be extremely clear that this is not business as usual. This is a real attempt by the Tories to put us out of business – possibly for ever.”

The Conservatives’ aim is to contaminate Labour to the point where, even if Jeremy Corbyn were deposed, the toxin would endure. For those opposition MPs who emphasise being a government-in-waiting, rather than a protest movement, the contrast between the high politics of the Tory conference and Corbyn’s rally appearance in Manchester was painfully sharp. They fear guilt by association with the demonstrators who spat at and abused journalists and Tory delegates. The declaration by a rally speaker, Terry Pullinger, the deputy general secretary of the Communication Workers Union, that Corbyn’s election “almost makes you want to celebrate the fact that Labour lost” was regarded as confirmation that some on the left merely desire to run the party, not the country.

But few Tory MPs I spoke to greeted Corbyn’s victory with simple jubilation. “It’s a great shame, what’s happened to Labour,” one said. “We need a credible opposition.” In the absence of this, some fear the Conservatives’ self-destructive tendencies will reassert themselves. The forthcoming EU referendum and leadership contest are rich in cannibalistic potential. Tories spoke forebodingly of the inevitable schism between European Inners and Outers. As the Scottish experience demonstrated, referendums are almost never definitive. In the event of a close result, the party’s anti-EU wing will swiftly identify grounds for a second vote.

Several cabinet ministers, however, spoke of their confidence in Cameron’s ability to navigate the rapids of the referendum and his pre-announced departure. “More than ever, he’s the right man for these times,” one told me. By this December, Cameron will have led his party for ten years, a reign exceeded in recent history only by Stanley Baldwin, Winston Churchill and Margaret Thatcher. That the Conservatives have so far avoided cataclysm is an underappreciated achievement.

Yet there are landmines ahead. An increasing number of MPs fear that the planned cuts to tax credits could be a foul-up comparable to Gordon Brown’s abolition of the 10p tax rate. Despite the appeals of Boris Johnson and the Sun, Cameron and Osborne have signalled that there will be no backtracking. At such moments of reflection, the Tories console themselves with the belief that, although voters may use Corbyn as a receptacle for protest (as they did Michael Foot, Neil Kinnock and Ed Miliband), they will not elect him. They also acknowledge that the current Labour leader may not be their opponent in 2020. The former paratrooper Dan Jarvis is most often cited as the successor they fear. As with Cameron and Blair, his relative lack of ideological definition may prove to be a strength, one MP suggested.

William Hague is fond of joking that the Tories have only two modes: panic and complacency. If the danger before the general election was of the former, the danger now is of the latter. 

George Eaton is political editor of the New Statesman.