The case for a ‘job guarantee’ to prevent long-term unemployment
Today The Mirror and The Guardian are among those who have covered the call that the TUC – as part of a coalition of labour market experts that includes the Work Foundation, the Resolution Foundation, the Demos Open Left Project (headed up by former Secretary of State for Work and Pensions James Purnell MP) and Professors Paul Gregg and Richard Layard – has made for the introduction of a universal job guarantee, available to all adults who have been unemployed and claiming JSA for more than 12 months. We believe that such a measure 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 previous recessions – that the Government will not allow a repeat of the years of worklessness these communities experienced in the 80s and 90s.
Government action to tackle unemployment during this downturn has been working. 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 is the next big policy challenge. As we showed in our last Recession Report (and will be discussing further in forthcoming editions), the negative impacts of long-term worklessness for individuals are well documented. They include the increased likelihood of mental health problems, relationship breakdown, alcohol problems, debt and homelessness. 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 over 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.