Member Article

Business group pours cold water on Labour's jobs guarantee

Labour’s recently announced compulsory jobs guarantee “doesn’t bear much scrunity,” according to business group, the Institute of Directors (IoD).

The party’s flagship employmeny policy would offer “starter jobs” to young people unemployed for more than a year. If the person refuses, they would lose benefits.

James Sproule, chief economist at the Institute of Directors, said no government could pull a lever in Whitehall and expect youth unemployment to disappear.

He said: “Whilst a short-term placement may help some young people gain experience, it ignores the fundamental reasons for long-term unemployment, such as a welfare system which gives young people little incentive to get off benefits, and an education system that has failed to give them the skills and attitude they need to get a job.

“Wage subsidies for employers are not the source of sustainable jobs. Government must focus on creating the conditions for growth, as only businesses know when consumer demand will allow them to create more positions.

“We’re also sceptical about the source of funding for this policy. High taxation has done much to destroy the pensions system in the UK, and weakening the relief so that some people end up being taxed multiple times on their contributions would further undermine the system. Bashing bankers and high earners may be politically appealing, but it doesn’t have much credibility as a way of making long-term policy.”

Labour has promised at least 50,000 jobs, paid for by cutting pension relief for people earning over £150k to the same rate as basic rate taxpayers, and a tax on banker’s bonuses.

The Guarantee will also apply to those over 25 who have been claiming jobseekers allowance for more than two years.

Announcing the scheme, Labour’s Shadow Chancellor, Ed Balls, said: “After the global banking crisis and with bank bonuses soaring again this year, it’s fair to pay for our jobs plan with a repeat of Labour’s tax on bank bonuses. We need a recovery for the many, not just a few at the top.

“As a country we simply cannot afford to be wasting the talents of thousands of young people and leaving them stuck on the dole for years on end. It’s bad for them, it’s bad for our economy and it’s bad for taxpayers who have to pay the bill.”

This was posted in Bdaily's Members' News section by Tom Keighley .