Not much new on unemployment or job creation from coalition

On tackling unemployment, today’s coalition agreement bears a striking resemblance to the Conservative Party manifesto – and has scarcely more detail. In places, the direction of policy appears very similar to that of the previous Government (although tackling unemployment appears less of a key priority), and overall no new vision for the labour market has been articulated. On the other hand, the vague nature of many of the statements that the agreement makes provides ample potential for significant policy shifts – but without more detail it’s too early to tell what these may be.

A key issue is the lack of prominence that is given to tackling youth unemployment and to providing support for those facing long-term unemployment. The only mention that young people get is in reference to the establishment of ‘service academies’ which will offer ‘pre-employment training and work placements for unemployed people’.

Local Employment Partnerships already go further than this – providing both training and a good chance of a job. How ‘service academies’ will differ remains to be seen. Although ‘work pairings’ for young people – a dubious proposal whereby unemployed people would be paid significantly less than the naitonal minimum wage to work for sole traders – are still referenced in the ‘universities and education’ section of the agreement, no mention is made of their widescale roll out.

This may be good news. On the other hand, the Job Guarantee currently provided for young people through the Future Jobs Fund gets no mention – a key concern for progressives. And those who are facing long-term unemployment are not even mentioned; while this could mean that Conservative workfare plans have been shelved, it also suggests that the coalition have not yet considered the economic and social importance of preventing long-term worklessness – which is still rising sharply – becoming permanent across the UK.

It is also striking how little mention the document makes of creating new employment opportunities. Stopping the national insurance ‘jobs tax’ and supporting the broad ‘creation of green jobs’ – no targets are given for the impact of either policy aspiration – are the only specific references that the document makes to employment creation. Given that rebuilding the economy will be a key task for the Government this is a real worry; more thought needs to be given to where new jobs will come from.

The ‘jobs and welfare’ section therefore focuses pretty exclusively on changes/continuations of policy to welfare to work. These include:

• Ending ‘all existing welfare to work programmes’ to create a single ‘Work Programme’. It remains unclear what this means in practice. It would be perfectly possible to rebrand all existing support, for example specific help for lone parents offered through the New Deal or for young people through the Future Jobs Fund, as one programme with tailored options for different groups of jobseekers being retained.

On the other hand, creating the unfortunately named ‘work programme’ could also provide an easy means to cut important sources of support for jobseekers who rely on additional support.

• Providing those facing the ‘most significant barriers to work’ with additional support after six months – not 12. This is pretty much what happens at the moment, where some particularly disadvantaged jobseekers are able to access support from the Flexible New Deal before 12 months of claiming JSA.

Worryingly, the coalition document makes no reference to what will happen to the recently introduced increases in support for all Jobseekers – including enhanced support from day one of unemployment and the six month offer of earlier access to training, volunteering and self-employment support. Even if some unemployed people can access more support sooner, this will be little comfort for the majority who find that less is available at an earlier stage in their claims.

• Making benefits ‘conditional upon willingness to work’. This is exactly the same situation as at present, where an escalating sanctions regime already exists for jobseekers who violate the terms of their ‘Jobseekers Agreement’ with Jobcentre Plus. There is no further information on how this sanctions regime – which evidence shows is not an effective way of influencing unemployed people’s behaviour – could be further tightened.

• Re-assessing all workers on Incapacity Benefit for their readiness to work. Again, a policy that is already happening. In a possible positive move the unworkably fast timetable for completing this migration, which the Conservatives had previously committed to, has not been mentioned. It may well be that it proceeds at the speed of 10,000 assessments a week as per Labour’s previous – and still highly controversial – plans.

• Investigating how to simplify the benefit system in order to improve incentives to work. As a commitment to change anything, this is weak – there have already been plenty of investigations into how to improve work incentives, not least from the Centre for Social Justice’s Dynamic Benefits report, which highlight plenty of ways in which policies - such as increasing the amount of income that can be earned before benefits are withdrawn - could make work pay more.

Such change, however, is expensive, and the coalition’s unspecific statement could equally be used to justify benefit cuts as a means to increase the relative rewards of low-paid employment.

• Committing to ‘support’ the national minimum wage. This is a positive move, but fails to match the Labour manifesto commitment to see the national minimum wage rise in line with average earnings.

Overall, this agreement is weak on job creation, and has few new ideas on tackling unemployment. At best, existing initiatives to support unemployment people will be retained and rebranded, at worst, provision will be cut, progressive programmes will be replaced with less effective support and Job Guarantees will be abolished.