Public sector jobs for all! Labour promises Jerusalem to young people

Pretty much everyone agrees that youth unemployment is a scourge of modern societies. The figures of young people out of work across Western Europe are clearly staggering. The Labour leader Ed Miliband has now come forward with a proposal to get young people back into work. He wants to fund 100 000 jobs for people who have been out of work for more than one year. While this sounds a very agreeable idea, the question is where these jobs are coming from. As Harriet Harman struggled to explain the basics of the scheme on the Daily Politics show today, Ed Miliband was touting the programme in front of the party faithful. 

Now, the question of funding aside, where would Labour find the 100 000 jobs? It seems the question is not one the Labour leadership is particularly troubled by. If private businesses are not coming forward to offer these jobs, so the proposal goes, Labour will simply create them in the public sector. Sounds familiar? Labour doing what it does best: creating phantom jobs in the public sector at the expense of ordinary tax paying families. The logic is presumably that this will push unemployment figures down and reduce the benefits bill. 

Only, this is a false economy. Creating public sector jobs that lead nowhere is not likely to offer long term career prospects to young people. The proposal demonstrates how little Labour has bothered to understand youth unemployment. Not all young people are unemployed, and this should give them a clue. In fact, there are still hundreds of thousands of young people who are not British and who have found employment in the UK. 

What British young people lack are employable skills, suitable training and practical experience. As Labour tried to push half of all young people in this country into universities up and down the country when it was in government, their work skills and experience suffered and companies looked abroad for young people with the right expertise and training. Creating phantom jobs in the public sector wont raise the skills levels of British young people. The solution has to start with a radical reform of the training and education sector which has for far too long parked young people on Mickey Mouse degrees. But this would require some serious thought, not rapid mis-fire policies. 

Real jobs for young people!

Youth unemployment in Spain has hit 51% amongst those aged 16-24. Greece and Italy equally record unprecedented rates of unemployed young people, and in Britain the number of people out of work in the same age group has hit a 16 year high with about 1 million young people looking for jobs. 

Everyone agrees that the picture is dire and action is required urgently. What is hotly debated though is HOW to bring about an improvement on the job market for, what some observers are already calling, the ‘lost generation’? 

The newly selected candidate of the Socialist Party for the presidential elections in Spring in France, Francois Hollande thinks he knows the answer. He wants to create jobs in the state sector by funding 150 000 new jobs through more borrowing. 

Is Hollande right? Can youth unemployment be solved by creating jobs through government diktat in the state sector? 

The countries hit worst by youth unemployment are traditionally countries that lack open labour markets. Observers agree that Italy has one of the least transparent labour markets in the developed world, where access to jobs depends on who you know rather than what you know. i.e. skills. Spain and France are similar in this respect. Job applications are often not advertised publicly at all. Nepotism is widespread in both countries which is often exacerbated by the fact that the gross of jobs in France and Italy are located in small to medium sized family firms. In many of these companies, personal loyalty is often valued over and above skills and abilities.

On top of this, there is a serious lack of employable skills since the education systems of many countries in the West have failed to create strong and effective links with local companies throughout the last two decades. The result is a large number of young people who either lack fair access to a transparent and open labour market, or lack the necessary skills to be employed. 

Now, given the need for structural reforms, does Hollande’s determination to create 150000 jobs for young people in the state sector strike one as a long term solution to the problem of youth unemployment? I doubt it. What it threatens to do is to expand an already overstretched state sector (in France currently a staggering 54% of GDP), while at the same time increasing the indebtedness of France and its exposure to the volatile financial markets. Once financing France’s budget deficit will become even more difficult, the French government will have to shed the very jobs that it created to alleviate youth unemployment. As a consequence, France will be back to square one.

What is needed instead are reforms of employment regulations, creating the flexibility for companies to take on young people, improved transparency in, and access to, the labour market, and improvements in the quality of education to ensure young people have skills that are needed in the economy. 

These changes require a concerted effort between educators, legislators and entrepreneurs. It may be hard way, but easy solutions, proposed by politicians for the sake of winning elections, are bound to backfire. Instead of phantom jobs, France needs serious reforms.