Belfast Telegraph

Friday 26 December 2014

Stormont must help create jobs future for young

The Executive should reinstate the training levy on firms to finance a new army of apprentices, says Robin Wilson

Behind the latest unemployment statistics are not only 60,000 stories of individual tragedy. Behind their rise - and the further increases in the jobless numbers yet to come - lies an economic ideology which has now been tested to destruction.

First, the figures. Seasonally adjusted unemployment in Northern Ireland is now nudging 7%. Nearly half have been out of work for more than a year, which makes getting back into work ahead of other job candidates nigh impossible: nearly 10 unemployed people are chasing every vacancy.

And the data conceals a larger pool of joblessness among those who are not connected with the labour market at all, the 'economically inactive'. While many of these are students and people with disabilities or long-term illnesses, 51,000 would want to work if a job was available.

Beyond that, many economically inactive people are women with caring responsibilities. If these were more equally shared and childcare more accessible, many would consider employment, too.

All in all then, just over two-in-three of the working-age population are actually in work. And a growing proportion of them are working part-time when they would prefer a full-time job.

So why this ever-growing pool of human insecurity and lack of self-fulfilment? After all, for years, it has been conventional wisdom in Northern Ireland that its unemployment problem was a product of a public sector that was too large. Cut this 'bloated' sector, so the argument went, and private enterprise would thrive.

Leave aside, for the moment, the fact that the public sector overwhelmingly comprises schools and hospitals. The days when Northern Ireland had state enterprises - Harland -amp; Wolff and Shorts - which made its public sector larger than elsewhere in the UK ended long ago, when these were privatised in the Thatcher era.

Even before the current, Conservative-dominated coalition was elected, public-sector jobs were being cut back. Almost 11,000 have been lost since its peak in September 2009.

Yet far from this economic 'rebalancing' fostering private employment, more than 37,000 private-sector jobs have gone, too, in the last three years.

The public sector could only retard the private in one of two ways - by 'crowding out' either labour or capital.

Yet if the first were the case, Northern Ireland wouldn't have some of the lowest private-sector wages in the UK: they are, on average, only 83% of the overall UK level.

And since this argument is usually made by business representatives, the second claim shows remarkable ingratitude.

Far from the public purse depriving businesses of capital, Invest NI and its predecessors have, of course, been subsidising private firms very substantially, without any equity return for the taxpayer, for decades.

The obvious reason why cutting the public sector cuts the private sector, too, is that it reduces effective demand in the economy.

This has been most dramatically evident in construction, which saw by far the largest drop in employment in the last year, with the collapse of public procurement for capital projects.

So what to do to stem the haemorrhage? The regional economy is forecast to flatline this year and confirmed and proposed redundancies are rising.

The first answer is not to abolish the one government department whose focus is on training and employment.

The Department of Employment and Learning (DEL), whose minister is Stephen Farry of Alliance, is being dismantled as a result of political spite on behalf of the other parties, aggrieved that Alliance has had two ministers following the last Assembly election - since those other parties couldn't agree on an alternative way of allocating the sensitive Justice portfolio.

The recent Belfast Telegraph/ LucidTalk poll showed the chasm between the Northern Ireland political class and public aspirations.

At a time when the clear public priority is to tackle unemployment, it beggars belief that DEL is to be broken up for motives which are purely party-political.

The second answer is that Stormont, which often behaves like a government of an independent Ruritania cut off from the world, has to join the fight with the other disadvantaged UK regions against the self-defeating austerity being pursued at Westminster.

As Keynes famously said, look after unemployment and the Budget (rectified by bigger tax revenue and lower benefit spending) will look after itself.

And the third answer is to invest in the future. One-in-five young people is out of work, yet the apprenticeship system, which would have provided a rung on to the employment ladder in the past, has been allowed to atrophy.

Individual firms will never invest enough in training, as it is always in their interest to poach those whom others have already trained. A training levy on firms to fund apprenticeships used to deal with this 'free-rider' problem. But it was abolished in the 1980s - again a product of Thatcher's market fundamentalism.

Germany is Europe's economic powerhouse, in part, because of its excellent apprenticeship system, collectively provided via local chambers of commerce.

Stormont should reinstate such a collective solution to reinvigorate apprenticeships in Northern Ireland and lay the ground for a better economic future.

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