Readers have responded to an editorial on youth unemployment, with one urging Labour to become the employer directly rather than relying on placements, apprenticeships, and work coaches. Simon Ripton, co-founder of Resilient Economy CIC, argues that these tools cannot conjure jobs that do not exist.
Macro solutions needed
Ripton contends that youth unemployment is not a crisis of skills or geography but insufficient government deficit spending. He explains that government spending is income for the non-government sectors, and with the UK running a persistent current account deficit, money flows continuously abroad. Unless the government runs a deficit large enough to offset that outflow, households and businesses cannot accumulate financial assets, leading to vanishing jobs and stagnating wages, with young people bearing the brunt.
He notes that unemployment has long been used deliberately as an inflation management tool, citing US economist Stephanie Kelton. Orthodox economic policy assumes that a certain amount of unemployment is necessary, and when the Bank of England raises rates, it intends to slow activity, and the inexperienced young are always first out of the door.
Job guarantee proposal
Ripton suggests that instead of paying employers £3,000 to hire someone, Labour should become the employer directly. A job guarantee, publicly funded and locally administered, would offer anyone a job at a living wage doing socially useful work. It expands in downturns and shrinks in booms, stabilising wages precisely when the economy needs it. He argues it is not welfare but work, and as a currency issuer, the UK is not constrained like a household.
Another reader, Susan West from Quorn, Leicestershire, argues that Rachel Reeves’s increase in employers’ national insurance contributions has reduced their ability to take on new people. She warns this has created a timebomb, as reducing the number of new people getting jobs also reduces the number able to start paying into pensions.
Neet concerns
West questions what will happen if young people not in education, employment, or training (Neet) never get jobs and those not on benefits don’t get pensions. She believes the government pays the pension contributions of those on benefits, so surely they could reduce costs by putting money into creating more jobs.
She highlights her son’s situation: at 27, he did what he was supposed to do and got a first-class degree in a Stem subject, but she now supports him on her pension. He was unable to do a placement for his degree because of Covid, and 6% compound interest means his student loan is now a third more than when he graduated. He has applied for almost 500 jobs, including temporary and part-time roles, graduate training schemes, and apprenticeships, and has done a government-funded data technician digital skills boot camp. He is now close to giving up.
