No future

“But why don’t those social enterprises take young people on anyway if they have genuine jobs to offer? The answer is economic. Social enterprises still struggle to attract mainstream investment so they are often undercapitalised and their restricted growth means that taking on skilled staff is a process undertaken carefully, and long-term unemployed young people with limited skills pose too great a risk.” 

Social Enterprise London(SEL)’s chief executive, Allison Ogden-Newton, explaining the impact of the premature demise of the Future Jobs Fund (FJF), an apparently successful but relatively expensive New Labour initiative to tackle youth unemployment. Under FJF, employers received funding from the Department of Work and Pensions (DWP) to pay young people aged under 24 at least the minimum wage for 25 hours a week for 6 months.

SEL’s Future 500 scheme enabled 164 social enterprises, including Social Spider, to employ young people through the scheme. As government funding schemes go, there was a phenomenally low level of bureaucracy involved, leaving social enterprises to focus on the challenge of offering unemployed young people what – for many – was their first experience of paid employment.

FJF was scrapped in June 2010 as the new coalition government offered an early declaration of its intent to make major cuts in public spending. Since then, youth unemployment has been rising and, in January this year, economist David Blanchflower noted that the number of unemployed 18-24 year olds reached 951,000, the highest number since comparable figures were first available in 1992.

As mentioned here, I don’t think it’s useful to claim that there’s a direct causal link between youth unemployment and the recent bouts of civil unrest in our city centres. Where there is a direct causal is between the current difficulties faced by young people looking for work and what Blachflower describes as ‘the danger these youngsters will become a lost generation’.

Blanchflower explains some of the reasons why young people are doing disproportionately badly in the current grim economic circumstances: “First, because firms operate last-in, first-out rules. Second, and more important in this recession, firms have cut hours and shifts and stopped hiring, including in the public sector, which of course hits the young hardest. It isn’t their fault.”

It’s difficult to blame employers for doing their best to continue to employ people they employ already when times are hard. The problem is that this makes an already difficult situation even more difficult for young people leaving school, college or university and trying to find their first job. The likely result is, as Blanchflower speculates, that (a substantial chunk of) a generation young people will miss out an early experience of the world of work meaning that, while most of them will work at some point, they may never catch up in terms of wages and career prospects. This is especially unfair given that they’re even less responsible than most of us for screwing up the economy in the first place.

Politicians of all parties have always been happy to rock up at an inner city community centre to bemoan a creeping moral decline linked to a pervading culture of worklessness, while happily explaining how whichever project they happen to visiting is doing such a great job of changing this dismal outlook in the local area. The fact that this rhetoric continued through years of relatively high employment may have partly served to mask the present horror. Either way, things are now officially really bad and many local projects are beyond political visiting.

Last year, Iain Duncan Smith, secretary of state at Department of Work & Pensions explained that is was ‘a sin’ for benefit claimants to fail to take up jobs. Unfortunately, there is not currently same the clarity from the government about its own responsibilities to young people looking for work.

Given what’s happened since, the abolition of the Future Jobs Fund is looking like an increasingly reckless step. So far, it doesn’t seem like any elements of the new Work Programme will offer similar low-bureaucracy, high impact methods of getting young people into work. Social enterprises are ready and waiting with the energy and ideas to help some of the nearly 1 million unemployed 18-24-year-olds break into the job market (as opposed to JD Sports). What we’re short of is cash.

While it seems unlikely that FJF will return in exactly the same form, something along similar lines – perhaps with the DWP paying a lower percentage of wage costs or focusing support on particular areas – seems increasingly vital.

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8 Comments

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8 responses to “No future

  1. David, I often reflect on what was possible in Russia when “social enterprise” was used to leverage localised economic development. I find myself wondering whether Britain’s development infrastructure might actually be more stifling than a country run by mafia clans, who in some cases will kill to keep others from opportunity. Could we actually be more corrupt?

    Over there, for example it had been possible to leverage funding for a community bank that led to 10,000 new micro enterprises being created in Tomsk. Around 99% survived their first year, because they had to. The alternatives were prostitution or crime. 12 years on in the UK and we’re still talking about a Big Society Bank just around the corner.

    In hindsight, It may have been a one off. Something which slipped through before anyone noticed what was going on.. As a charity community leader said to me recently. “social enterprise gets a lot of support, provided it’s small scale. Attempt something big and you’re treading on toes. You become a threat to vested interests”

    I’d learned something from Russia about marketing. When babushkas, well acquainted with the state use of misinformation first saw detergent ads, they’d shake their heads and tell each other “Look, this stuff must really be bad, they have to advertise to sell it”.

    While we may be lower in overt corruption we have greater skill in distortion through the sophistry of PR and marketing. By such means what begins as a grass roots alternative to trickle-down capitalism, morphs into its intrinsic ally, as evidenced by what many perceive as back door privatisation of the NHS. Like it or not, the public backlash against this in particular has tarred all of us with the same brush.

    Polly Toynbee nails it again in her critique of Sir Ronald Cohen last week drawing attention to the creation of profit from “inviting the rich to make money out of the poor”

    This wasn’t what we had in mind for “rethinking capitalism” – another expression which the PR machinery is now attributing to business leaders. If there were any truth in it, we’d not be having this conversation.

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  2. All true very sadly. This always brings me back to the old question: “there must be a better way”. If we take our banks as a example of Modern Capitalism, I would agree with the sooth sayer : “we are all doomed”. They (the banks) seem to be a text book example of inefficiently and miss-management. Not wishing nailing my flag to any particular mast, Marks and Engles wrote about Public Ownership, not as it later became State Ownership. They distrusted the Market and saw Public Ownership as one of the alternatives. If we The Public owned something, we The Public might be more sane in our investment strategies. But here we have the problem! We The Public hand over our responsibility to : “those who know better”. Can anyone offer a better strategy taking into account all of our 21st Century technologies and gizmo’s? Answers to this blog PLEASE.

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  3. If it’s harder to argue for a causative link between public disorder and youth unemployment there’s certainly a strong correlation – we tend to get widespread public disorder at times of high unemployment, involving young males who are not able to participate in the labour Market.

    Now, the FJF might have been expensive, but only if you don’t factor in the costs of unemployment to the state in the long run – deterioration of human capital, greater risk of illness, payment of out of work benefits. It was intended to be the beginning of an actual “job guarantee” – a shift from the long-term payment of unemployment benefits towards the state acting as employer of last resort (or part-employer in most cases).

    Incidentally, the FJF wasn’t very “New Labour” in that it had fairly radical implications – that the state could act to create jobs across the economy by means of a subsidy. As the people who caused the crisis were pushing for austerity and more unemployed people, this was a pretty bold alternative.

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  4. admin

    Jeff,

    Really like the detergent quote. And the Toynbee article about Cohen raises some big points (I’m not sure I agree with Toynbee but I’ll do something on that shortly).

    Mike,

    I suppose Glas Cymru provides a possible model for public rather than state ownership: http://www.dwrcymru.com/English/Company/Glascymru/index.asp
    but it’s also worth looking at specifically co-operative models.

    James,

    I was pointing out the FJF was introduced by the New Labour government rather than seeking to place it ideologically. I think it was a pragmatic idea that could be equally relevant to Conservatives keen to ensure young people get the opportunity to engage in productive activity – as opposed to getting caught up in the benefits system.

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  5. But it would not be equally relevant to the Conservatives – they scrapped the FJF because they believe in a buyer’s market for labour, not the cost. The concept of a job guarantee scheme isn’t merely pragmatic, it is based on the idea that the state should be employer of last resort. As the party of capital, the Tories prefer labour costs to be reduced through increased competition – structural unemployment, in other words.

    Mike, co-operative and mutual enterprises have certainly fared better than their capitalist rivals when you consider the financial sector and the scale of the bail-out for many banks, including those which were once building societies…

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  6. @Mike, On the matter of replacing capitalism and banks If you were to read the Guardian’s articles on social enterprise and sustainable business, you’d be forgiven for thinking that the way we do business in future was being led by the CEO of B&Q, Ian Cheshire rather than John Spedan Lewis. who actually described the perversion of capitalism. The colleague I refer to above came up with an alternative 15 years ago and posted it on the internet. It described how the information age offered an unprecedented opportunity to deploy this alternative at the community level, globally.

    It’s the PR juggernaut in action. There was an hilarious piece by Marina Hyde last week about the Branson version rolling out to cover the story of the house fire on his private Island. He’d apparently lost his life’s work, an autobiography.

    Now consider all these things: capitalism, banks, PR and loss of a life’s work. I’ll show them all rolled up into one example. It’s a bank talking about trust, support of social enterprise. What you’ll see below is my introduction which leads to a brief email exchange in which I describe our work. .

    http://www.socialbusinesstour.com/leadership-symposium-in-budapest-business-based-on-trust/

    It’s a life’s work for the author in particular, who actually told me that he was writing for his life. We both knew he was writing for the lives of many children abandoned to state care.

    You won’t find our project in their subsequent awards, but you will find them as partners of a replica project, a year later. Consider the implications on the reputations of all those involved and you can imagine why ours in an inconvenient truth.

    When the circumstances described in our reports and strategy proposal became mainstream news in the Sunday Times 6 months ago, we read that it was “no longer acceptable to look the other way” and that “by our inaction, we are all guilty”.

    The last gasp of PR refers to a ‘highly respected British newspaper”

    http://www.kyivpost.com/news/opinion/op_ed/detail/96864/

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  7. I would love to see a true financial breakdown comparing the cost of such high youth unemployment with the cost of employing them all even at minimum wage. If we take into account the cost to all of us of current and future benefit payments, possible costs to the NHS and the criminal justice system and the social unrest such high levels of unemployment inevitably create I suspect the results may be enlightening.

    I’m not as shy as many in saying that poverty causes social unrest. It may not have done so in the past but we’re not living in the past we’re living now and poverty does cause criminal behaviour and social unrest. Maybe it’s nearer the truth to say the current levels of financial inequality are a cause if we want to be picky. But it’s not only financial poverty it is all of the other forms; aspiration, opportunity, social mobility.

    I’m sure many would disagree with my next statement but I also think there’s a case for making it compulsory for all children between the age of 14 and 18 to do some form of work experience, paid or unpaid.

    I also think there’s an argument to say it should be compulsory for all businesses over a certain size to provide such work experience.

    Schooling in many cases does not do a good enough job in preparing young people for the realities of life.

    One of the things we rarely talk about is the social element of work. There are enormous benefits for a child in widening their social circles; many of us do this through our work.

    Maybe we all need to get off our backsides and start getting creative?

    One of the major problems with our system of government is incoming governments putting an end to programmes because they are ideologically opposed to them. This practise needs to be stopped. We should never allow new governments to come in and change a scheme such as FJF without said scheme completing its allotted time span and being thoroughly evaluated first.

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  8. @Martin,
    What you say about the social engagement that comes from a working environment is very true. I’ve also found there’s an education in being part of a village community. Yesterday, we cleared up after our annual carnival which has now been running for 43 years. If we didn’t do this along with our boot sales, the village hall would be economically unsustainable.

    Sure, we still have our wastrels who’ll just turn up without participating in the preparation and clearup. Yet, by the time the carnival is over and all prize money has been paid, not muck left in the kitty. Yet we’ve made an investment in the local social economy and the community organisations which are part of it.

    I learned, for example, that the Stroke Association were delighted that they’d collected enough to fund a coach trip.

    What’s disappointing is that those involved are as is typical in VCOs all 50+ years of age, with the greater part in their 60s and 70s. Partly to do with the demographic of rural life where most will move away to find work. A good reason for me to now focus on creating local sustainable business.

    What we’re not getting in this endeavour, is the support of local government or our local media As ever, my letter describing the need didn’t warrant a reply.

    http://forestofdean.socialgo.com/magazine/read/our-week-of-shame_53.html

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