Jim McCormick: A slap for the idle hands

IT HAS been a recession unlike the rest. Not just in its depth and duration, but in its effect on jobs.

IT HAS been a recession unlike the rest. Not just in its depth and duration, but in its effect on jobs.

Holyrood’s economy committee is onto something significant with its new inquiry on under-employment. This broad measure of how the labour market is faring tells us much more than headline rates of unemployment or total numbers in work. It includes those who are working part-time because they can’t find full-time jobs, as well as those who are inactive but who would like to work.

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Previous recessions have been marked by a much bigger spike in unemployment than Scotland has experienced this time. The under-25s have borne the brunt of a huge rise in joblessness. Their risk of unemployment is three-and-a-half times greater than for everyone else. But a shift towards part-time work has been the other striking trend. As Professor David Bell of Stirling University reported at the start of the week, one in ten working Scots want to work more hours – similar to the UK average, and up by one third since 2008.

Having your hours cut may be better than losing your job. As a short-term response to economic strain, it helps to blunt the full-force of austerity. But here’s the snag: under-employment looks like it’s here to stay. In fact, a large group of people wanted more work even when the economy was faring well. And it’s not unique to the UK – even Australia’s more buoyant economy has seen under-employment more than double in a generation. If under-employment is here to stay, the question is what we’re going to do about it.

First, we can’t tackle it in isolation. We need a thorough, accurate look at today’s jobs market. Its features include a persistent problem of in-work poverty partly due to low pay as well as not enough hours. We all pay the price through tax credits to prop up this end of the jobs market. This might be bearable if lots of people had a short spell of low pay before their earnings rose. However, many are stuck in a revolving door, moving in and out of insecure work.

Second, a fundamental issue is lack of access to good quality skills training. Although unskilled people make up a shrinking share of the workforce, their chances of progression are slim.

Over the devolution years so far, just 10 per cent of unskilled workers took part in job-based training in the previous quarter compared with 30 per cent of the workforce as a whole. Temporary work on a casual, seasonal or agency basis is strongly associated with low pay and limited training. So, while many are getting onto the jobs ladder, the failure to invest in future prospects blunts productivity. In the long-run, we can’t afford to stick with the mantra that any job is better than none, or that work is the best route out of poverty. These are half-truths at best.

Looking to the end of the decade, recent projections should serve as a wake-up call. The UK Commission on Employment & Skills may be one of the lesser-known UK-wide bodies, but its projections for the Scottish labour market released a few months ago deserve greater attention. They offer a revealing glimpse of the likely position by 2020.

Overall jobs growth is expected to be slower in Scotland than for the UK as a whole, although a net increase of 50,000 jobs is projected. However, women’s employment is expected to stall, apart from a very small rise in self-employment, while men’s employment – especially in part-time jobs – is projected to rise.

Looking at the likely kind of jobs (see table), Scotland is expected to have an hour-glass shaped labour market to a greater extent than now. That means continued growth of both high-value and lower-paid jobs: more professional workers, managers and care workers, but fewer people in administrative posts and skilled trades. The decline of these skilled jobs which have traditionally offered a chance of advancement means we are steadily losing the connection between the bottom and top halves of the labour market.

Forecasting is not fate – it doesn’t predict what will happen, only the likely pattern without significant changes. In fact, more than 20 scenarios were developed to test faster jobs growth for women, for Scotland relative to the rest of the UK and in key sectors. In-work poverty remains a feature in all cases. So we’re going to have to rethink our assumptions about how people can work their way free of poverty.

Another UK body recently established by the coalition government is the Social Mobility & Child Poverty Commission. Scotland’s man on the commission will be Douglas Hamilton of Save The Children. One of its top priorities should be to understand what’s happening to jobs, now and in future, as well as the impact of welfare cuts and benefit caps for low-income families.

What about those who are categorised as inactive, notably working-age people on long-term sickness benefits? Both the coalition and previous Labour governments have been right to pay attention to the problem of disguised unemployment. However, cutting welfare costs is a poor motive compared to the longer-term goal of achieving a good match between individuals and employers.

The work capability assessment has been the most controversial of welfare reforms, being applied without regard to the individual’s job prospects. Someone who has been on the sick for more than five years, and has limited skills, faces lower odds of getting into work than someone who has been out of work for a year and is well-qualified.

Geography matters, too. And the overall state of the economy matters most: the long period of economic growth to 2008 resulted in benefit claims falling in older industrial parts of Scotland, including incapacity benefit numbers from around 2003 onwards.

So the principle of removing barriers to work is sound. Consistently, one-third of people who claimed incapacity benefit said they would like to work again. But some need to be in jobs where they can manage fluctuating health conditions. Finding employers who can accommodate good days and bad days is a major challenge. Above all, the climate of fear that surrounds being found fit for work, losing one-third of a limited income and a drawn-out appeals process needs to be transformed.

Steps back to work, volunteering and education need to be incentivised not penalised.

I trust it’s not too late to propose a new year’s resolution to politicians and employers: let’s talk about work. How much we’ve got, its quality and productivity and the prospects it offers. And let’s start now. Not after independence or further devolution. Or we’ll be left to repeat the mistakes of the past – but this time with less money.

• Jim McCormick is Scotland adviser to the Joseph Rowntree Foundation