This is the first of a number of reactions to yesterday's report by Lord Alan Milburn for the government on young people Not in Employment, Education or Training (NEETs).
A much deeper technical analysis is in development: my continual theme will be that Milburn has missed the issue, and was that the point of this?
Alan Milburn said in a new report, published yesterday, that Britain faces a crisis because more than a million young people are not in employment, education or training. Labour ministers appear to agree. Much of the media agrees as well. It has gone into panic-meltdown mode over the issue, meaning the report has generated headlines, commentary, and demands for action.
In one sense, they are all right. There is a crisis. I agree with that. Too many young people are being denied the opportunities they hope for, and even crave, and deserve. But I do not think the crisis is the one that Milburn, Labour, or most commentators believe it to be.
The conventional story is that something has gone wrong with young people. They are said to be disconnected from work, education, and opportunity. The blame is not aimed straight at them, but, in standard neoliberal fashion, it is being outsourced, leaving the impression that young people do have a responsibility for their own situations. Neoliberalism is about nothing if it is not about blaming the victim of its policies for their situation, over which they have little or no control.
Despite this, the challenge, we are told, is to reconnect young people through training, apprenticeships, welfare reform, careers advice and employment support. Young people must be in the workforce. That is another neoliberal mantra. And, no doubt, all those measures might help at the margin.
But the problem is that they address symptoms. The real crisis lies elsewhere. The real crisis is that Britain has spent decades operating an economic system that deliberately creates unemployment and then expresses surprise when unemployment appears. There is nothing surprising about the current NEETS problem. Indeed, as the data I will publish later show, there is, in fact, nothing exceptional about what is happening now. The NEETS problem exists because the government has chosen that it should. That may sound surprising, but it should not be.
The fact is that the entire foundation of UK macroeconomic policy rests on the belief that some unemployment is necessary for inflation to be controlled. Neoliberal economists call this the NAIRU, the non-accelerating inflation rate of unemployment. Behind the technical language is a very simple proposition. The economy must always contain a pool of people who cannot find work.
Why is that? It is because orthodox economics claims that if too many people are employed, inflation will always accelerate. The answer is therefore to reduce demand whenever inflation appears, and the principal mechanism used to achieve that goal is higher interest rates.
The Bank of England raises rates in the expectation that businesses will invest less, consumers will spend less, economic activity will slow, and employment opportunities will decline, leading to higher unemployment. That outcome is not an unfortunate side effect. It is the policy objective. The Bank is deliberately trying to create unemployment.
The first victims are usually young people. They have the least experience. They are the newest to the labour market. They are the easiest to exclude. They have little chance of complaining because they are, economically, just about the weakest group in society, and, when many have few dependents, they are also considered the easiest group to sideline. When economic opportunities contract, they are pushed aside first. The NEETS issue is then deliberately constructed. It exists as a policy choice.
The result is that when Milburn identifies more than a million young people excluded from employment, education or training, he is identifying a genuine problem. What he is not identifying is the underlying cause, and tellingly, he did not look for it, because I very strongly suspect he did not want to find it.
The cause is not a lack of effort by young people. The cause is not a failure of aspiration. The cause is not primarily a failure of skills. The cause is an economic model that regards unemployment as a policy tool.
That is why I think the debate around NEETS needs reframing. Instead of asking how we manage unemployment amongst young people, we should ask why we continue to create unemployment amongst young people in the first place.
Modern Monetary Theory provides a very different way of thinking about this issue. MMT begins with the proposition that unemployment is always evidence that government has failed to ensure sufficient demand exists within the economy. If people want paid work but cannot find it, that is a policy failure. The problem is not the people. The problem is the policy framework.
The solution is not to maintain a buffer stock of unemployed people. The solution is to maintain a buffer stock of employed people. That is the logic of its so-called job guarantee, which I think needs to be delivered through a genuine, long-term, fully funded policy of full-employment.
For most of the period after the Second World War, governments accepted this responsibility for maintaining high levels of employment. Full employment was understood to be a core economic objective. The idea that unemployment should be deliberately created to manage inflation only became dominant with the rise of neoliberal economics.
The result has been entirely predictable. We have accepted the exclusion of millions of people from economic activity as the price of managing inflation. We have treated unemployment as normal. We have even convinced ourselves that it is necessary.
Yet there is no shortage of useful work needing to be done. We need carers. We need environmental restoration. We need better public services. We need housing improvements. We need people to help deliver the transition to a sustainable economy. We need stronger communities and more social support. The idea that there is not enough work available is simply untrue.
The problem is that these jobs cannot be done because the government says its fiscal rules prevent them from being funded.
What is lacking is the political will to create the jobs that society needs.
So, Milburn is right. There is a NEETs crisis. But the crisis is not principally the existence of a million young people outside work, education or training. The crisis is that Britain continues to operate a monetary and economic system that deliberately creates unemployment, particularly amongst the young, and then treats the consequences as a mystery requiring yet another report, in response to which the next prime minister will do nothing, as the report will have been prepared on the instructions of the previous one. NEETs are that disposable.
Until NAIRU, central bank independence, a focus on monetary policy to control inflation that does not work, and neoliberal economic policy are abandoned, and people are put at the centre of politics again, nothing will change, and reports will keep coming, as will unemployment, and no one should be surprised.
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Yes I agree with your analysis. The overall response seems a bit similar to the situation in the 1980s when I left polytechnic with a degree but no work experience and unemployment was running very high in the early years of the Thatcher government. Lots of people I knew had similar experiences – as is known the ‘scarring’ effect lasts for many years.
The situation now should not exist but as you indicated the government with its fiscal rules and limited thinking capacity does not have the answers. I noticed on R4 yesterday that an interviewer asked ‘do we need to change the welfare system’ as if it is somehow too generous!!!
The underlying assumption of NAIRU is that inflation is caused by greedy workers pushing for higher pay rather than genuine resource shortages, like the fossil fuel crunches today as in the 1970s. Making people unemployed doesn’t make oil and gas cheaper.
Agreed
On a day when Tony Blair gets a well deserved kicking it was pointed out that he set up a number of Policy Delivery Units.
They were given the job of implementing an idea and got on with it so that whatever happened to Blair or whatever distraction came along such as an illegal war things still happened. Not only that but action could be taken across departments.
There is an interesting article about NEETS here
https://national.thelead.uk/p/labour-youth-unemployment-alan-milbnurn-report-uk-unemployment-childcare-costs-transport
In particular as a ‘for example’
Fifty-seven per cent of working-age people in England live in areas where it’s very hard to access a workplace within 45 minutes using public transport. Young people between 16 and 24 have the lowest car access among the population, and the cost of running one is rising weekly as geopolitical crises hit fuel costs at home. Meanwhile women and girls also reported they had not pursued some employment or training options due to safety of transport available to them. More than a third of women surveyed by the British Transport Police say they have been sexually harassed or abused on a train,
So before we do anything else here’s a major issue that involves amongst other things Public Transport and The Criminal Justice system getting on and doing something before we even start looking at gettuiing more people back to work.
Very good point
In an interview by C4 News last night a young man made a very simple and telling point. He said NEETs is the wrong acronym and he resents it. He argued young people are LEETs…looking for employment education or training.
Agreed
I read about Milburn’s report yesterday, with a heavy heart, as it was contradictory. He says there is no blame, refers to the reduction in jobs and apprenticeships, but then talks about ‘welfare reform’. It doesn’t add up, and does not, as you point out, address the fact that unemployment is a cornerstone of neoliberalism. Business as usual, elephants in the room, a new initiative, and if it doesn’t work, the recipients will be blamed.
Thank you
We agree
Very frustrating when a report by a Blairite neoliberal former failed Health Secretary makes headline news and generates interviews on TV news, without any critical questions or comments from the MSM journalists or an alternative heterodox economist (ideally Richard).
Torsten Bell, Parliamentary Secretary for the Treasury, was interviewed on BBC Breakfast this morning about Milburn’s report and the primary focus of the journalistic questioning was around the growing number of NEETS relying on benefits to live and how the government can possibly bring in ‘necessary’ welfare reforms to address this when earlier ‘reforms’ (cuts) were effectively blocked by the remaining Labour MP’s who still mostly identify as socialists. I still have a sore throat from shouting NOOOOOO! at the TV.
🙂
“”Weak leaders ask, “who’s at fault?” Strong leaders ask, “where did the process break down?” [Michael Timms]
Exactly right. Even primitive societies did not make this elementary mistake, which sophisticated ones have had to manufacture. When there is work to be done, of which there is plenty(just look around) needing more people, and the people are available, they must be used. It is simply daft not to. Even cave dwellers knew as much. I cannot believe the gov do not know this.
So much misinformation out there implying young people are too fussy and only want career jobs. I’m in Devon and I know plenty and lovely young people who accept working in care work, McDonald’s and hospitality often on zero hours contracts and working very hard. But the minimum wage and NI changes last year have really affected the job situation in what was already a precarious economy.
Unlike the 80s though, there aren’t the redundancies for those in their 50s and 60s and we’re still expecting lots to work into their late 60s with health issues, which makes no sense when a healthy younger person would benefit from a job.
[…] The first is here. […]
“For most of the period after the Second World War, governments accepted this responsibility for maintaining high levels of employment.”
In the late 1950s, Sheffield’s Council designed and built a massive social housing block of flats, deliberately locating it on the top of a hill overlooking the city. Park Hill provided new homes for working-class renters. Sheffield was proud of its social provision. History accounts tell of the brutalist architecture. What they all appear to omit is that the flats were built by the Pubic Works Department of Sheffield Council. Many more Councils throughout the country built their own social housing using skilled builders directly employed by the Council.
I don’t know how that might work now, but it shows that it is possible.
It would be entiely possible now. You just have to hire the people.
I know those flats
To connect young people to the workforce how about ensuring there is a workforce that needs them. I was proud to work all my life in the public sector and there were jobs for people of all educational attainment and skills from gardeners, refuse collectors, clerical workers, qualified and skilled workers to senior managers. Now we don’t have enough of any of these types of workers to do the things people need. It’s clear it would take a huge reversal in investment policy to stimulate the public sector workforce again but why don’t they ever think of the huge savings on health and welfare, the generation of income tax and spending power leading to more job creation outside the public sector. It’s not rocket science. I know I’m speaking to the converted but can’t we get this very simple message across?
How?
Possible solution…
Billions are given out under government contracts, part of that contract should include a provision for companies awarded the contracts to employ a percentage of 16 year olds according to the value of the contract.
Taken a step further…
The 16 year olds for 2 years are allowed to try all aspects of work within the company to establish where their aptitude lies… this could be cleaning, computing, catering or elsewhere, the emphasis is on where their aptitude, skills and interests lie as established between the young person and mentor. Allowing the young person the freedom to try different aspects of the company is the essential element in order to give them a chance to discover where their future prospects lie.
At 18 the young person can then be sponsored by the company to attend University to study the subject they have shown promise in, this means they enroll on a course of interest to them and of value to the company. Whilst studying, they remain ’employed’ by the company and paid.
They young person signs a contract to ‘repay’ the cost of their education by staying with the company for ‘x’ amount of years (providing stability for them and the company).
Win win for the young person, the company and the University.
The scheme could/should be expanded to include any large company whether or not they receive government contracts, obviously there may be some who abuse the system but safeguards can and should be built in to avoid this.
The Housing Association I worked for used to insist all contractors employed by us had to have a certain number of apprenticeships for local people.
We also had a plan for the predicted number of retirees in our own workforce and recruited apprenticeships accordingly. With a preference for families of our own tenants.
We lost a few to other firms and self employment but that was part of our social purpose.
It was sound business sense
[…] response to the NEET's report from Alan Milburn, to which I have already referred this morning, here and here, I invited my son, James, who now works with me on research and content creation, to write […]
I’ve begun to find the framing around employment odd as I’ve increasingly questioned the supposed importance of employment by itself. I think it’s a reductionist viewpoint that having a job is in itself purposeful and meaningful as it’s easier to measure that from a numbers perspective. But activity that brings you purpose would likely be something contributing to society or others – much of which would not be part of a job. Admittedly, some jobs will be important contributors to society, but the problem, as David Graeber identified, is that many vital jobs are also s**t jobs in pay, conditions and treatment.
The worship of employment for its own sake (or as a way of distributing money) leads to bulls**t jobs, but those in such jobs are only doing so to avoid the threat of homelessness and starvation. And, as above, when the system can’t even generate the amount of bulls**t jobs, then you just hammer at those without jobs as if they are somehow plagues on society rather than another of its victims.
Much to agree with
Milburn should be ignored. The way he’s been lining his pockets (à la Blair) since leaving the politics is sickening.