A new word has entered common usage as a result of this recession. With young people being the worst affected by the downturn (nearly double the percentage of 16-24 year olds are unemployed compared to the rest of the adult population), we’re hearing a lot about those who are not in employment, education or training. Or ‘neets’ as they’ve become known.This is undoubtedly one of the most important problems thrown up by the recession. There is a mounting body of evidence that being unemployed early in life can ‘scar’ people later on. If you are out of work when young you are more likely to have spells of unemployment later in life. You’re likely to earn less in the future, too. And we know that being in work is massively important for general well-being, sense of identity and social mobility. So the Conservative candidate for Hammersmith, Shaun Bailey, was right to be hitting the streets this weekend to highlight the problem of youth unemployment. Despite a slew of programmes introduced by the Labour government – from guaranteeing jobs to increasing education places – it looks likely that they’ll miss their target of 7.6% of 16-18 year olds being ‘neet’ this year.
The trouble with ‘the neet problem’ is that it isn’t one problem. It’s lots of very different problems that have been unhelpfully bundled together in a single term. How can politicians come up with policies to help ‘neets’ when it includes everything from top graduates unable to find jobs and those leaving school with no qualifications? And what about those who are ‘neet’ in cities dependent on manufacturing compared to those in rural communities? And don’t forget the difference between men and women – women are four times more likely to have an identified barrier to entering the labour market than men.
The things that are stopping these groups entering the labour market, and the policies that would therefore help them find work, are quite different. So perhaps the first step to tackling the ‘neet problem’ would be to ditch the term ‘neet’. Then we can have a proper discussion about the range of policies that are needed to support these very different groups.
Jonathan Clifton
There is one single cause of the lack of jobs and that is the low demand for consumer goods. If this demand was greater, the numbers in production grow and all of the related workers and government employees would increase, due to the close relationship between their working outputs. In this case we need only look for the cause of the low demand and not have to argue, as Jonathan does, that the situation is more complex. Let us regard this single (vital) aspect of the social system and the lack of jobs.
ReplyDeleteIf the income tax was raised consumers will have less to spend their demand shrink and more become unemployed. However, the government has a greater income. It will spend our (taxed) money on improving the surroundings and employ more. What they spend, we don't, so the total demand and numbers unemployed will not change. A reduced tax allows us increased demand for consumables, but it also results in more unemployed government workers. So either change has almost no direct effect on the overall macro-economy!
By this comprehensive view the influence of a change to the amount of a production-based tax is only the secondary effects that are significant. We should not consider only one class in our society but also be concerned about all classes. The secondary effect of increased income tax or purchase tax for giving more work to the government employees is to produce improvements to the infra-structure, instead of raising our direct consumption. These national improvements will slowly make it easier to travel and reduce our commutating/ production/ distribution costs. Simultaneously they will make the land more productive. And there are rich and speculative interests at work, so it is of benefit to the land owners that government investment in the infra-structure proceeds. All increased production-based taxes have this effect.
This matter appears to be complicated, many individual and company interests are involved. Indeed it is hard to avoid the politics when discussing them. All of these tax changes are production related, but in total they will not directly help us to escape from the present limitations in overall demand.
A tax on land values instead of on incomes mostly adversely affects the land owners and banks, whilst giving consumers less limitation. Poorer people will not be much affected, middle class will have more to spend and rich land speculators and banks will have less. This is a start in the right direction, but we should be aware that somebody will loose. It will stop the polarization of our society into two classes and the middle class will improve its situation.
Land values will drop because the effect of the land tax is to make unused land, being held for speculation, no longer worthwhile. This means a further reduction in production costs and more prosperity. But the foreclosures of mortgaging speculators will grow and there will be bank failures and savings losses. The best way to avoid this is to gradually introduce land value taxation, thereby giving the speculators sufficient time to transfer their investments to something more worthwhile. With growing demand, it is obvious where this should be, into the shares of the new companies.
The single secondary effect is that a tax on land values is difficult to hide from. Thus the army of tax collectors will be able to be thinned out and more people employed in making goods. Another secondary effect is that with more land becoming available, the opportunities offered to entrepreneurs, even those who simply wish to independently grow their own food, will flourish. This is good news, but it implies that the past fear of bankruptcy by the banks and big investors has been constraining the progress of the macro-economy by means of high land values.
By raising these matters one can see that tax matters are more significant than simply the redistribution of the nation's money. Opportunity is being constrained by our system's topology and laws that favour the land owners. The answer to unemployment is to tax more sensibly.
You're right NEETs are lots of different problems bundled under one heading. And it's true that increasing demand and jobs is what's required. But that is not sufficient. Once people slip off the edge of the labour market they need expert help in re-connecting, a job that JobCentre Plus finds difficult because their staff are often poorly trained and fixated on easier win targets. The private sector sometimes does better because its staff are better trained, better paid and stay longer but they too go for the easier to place people. So what's the answer? Local employment projects, usually in the third sector, have shown their ability to coax the hardest to reach back into work, as we found when we reviewed their work in the East Midlands and South Wales. They sit within very local networks and help all-comers, regardless of age or benefits status. See http://www.martinyarnitassociates.co.uk/workforcedevelopment.php
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