Matthew Oulton discusses what the next Labour government can do to tackle labour market issues, including unemployment and underemployment.
With unemployment at a record low, vacancies sky-high, and the pandemic employment crisis now a distant memory, things may seem good for the Tory record on the job market. Indeed, one of the major selling points for the Conservative Government to the public is the Job Retention Scheme introduced in 2020. The spectacle of hundreds of thousands of British workers losing their jobs through no fault of their own was so bad that even Rishi Sunak, a self-professed Thatcherite, had to step in.
However, when it comes to Labour market interventions, the pandemic has changed the game. The economy is struggling with an abundance of jobs chasing a scarcity of workers – a pressing, if different, challenge to rampant unemployment. Where, in the past, the Tories may have shrugged their shoulders and refused to act, they can no longer claim that the Government is powerless to improve the labour market. Yet, employment has been relegated from a central political focus by concerns about inflation, cost of living and the public finances.
The labour market should still be a major focus for the Labour Party.
A decade of slow growth, productivity stagnation, and poor quality, insecure work is still yet to be addressed. Underemployment remains rife and the cost of living crisis – which is in part a reflection of poor up-skilling efforts by the Government since 2010 – can only be addressed through job market reforms.
So, what should the next Labour government do?
Firstly, Labour need to make sure that everyone can get the skills they need. The unemployed should be offered training to help fill vacancies and address chronic skills shortages, and those in employment should also have the opportunity for life-long learning. For too long the Conservatives have focused on reducing headline unemployment without thinking about the quality, stability, or productivity of such work. Gig work may be suitable for some people, for example, but it should not be an economy-wide substitute for stable high-skilled work.
Underemployment – workers having fewer hours than they’d like or working jobs that don’t fully utilise their skills – has been a major failing of the UK job market for a long time. Labour can support and foster the aspiration of British workers, funding night school, employee training schemes, and lifelong learning. The Tories have become the party of dead-end jobs, 0-hour contracts, and precarious work. Labour can offer the alternative – a high skill, high wage, and high growth economy.
Secondly, we must provide assistance to those who want to re-enter the job market after a long time. The government only counts someone as unemployed if they are actively seeking work and can’t find it. After a decade of anaemic economic growth and stagnant wages, however, many people have given up looking for work. We do too little to help parents who want to return to work after a hiatus or carers who wish to work flexibly return to the job market. This might be good for government statistics, but it is talent wasted.
Finally, Labour need to make the case that a dynamic and successful labour market, which drives a dynamic and successful economy, requires collectivism. Before the pandemic, I worked at a company with many American clients. It was astonishing how many white-collar professionals maintain a side-hustle. People had a passion, talent, or skill in something other than their ‘day job’ that generated them income. For some this was essentially a hobby, however, for many of them the only thing keeping them in their corporate job was the promise of guaranteed health insurance. This, in one of the most dynamic job markets in the world, was a clear example of the lack of collectivised healthcare unnecessarily slowing the American job market.
We may not suffer from the same condition here, with the NHS providing healthcare that is free at the point of use, but we do see similar problems. In imposing punitive Universal Credit waiting times and incredibly low support for the low-paid or unemployed, we discourage people from taking chances, starting businesses, or becoming self employed. Narrow-minded individualistic thinking is a deadweight on aspiration. If we want a thriving market economy, we must ensure that we are empowering people to build things, to take sensible risks, and work to improve their, and their family’s, prospects. Contrary to Thatcherite logic, we all have a collective role in facilitating this; it cannot be an individual’s endeavour alone.
Unemployment is low, but the job market is not yet serving the British people. The Conservatives lack the ambition to change this. They are content to brag about the number of people who are in work, without addressing the poor fundamentals that have plagued our economy for years. Labour can, and must, offer the positive alternative. A better, more flexible job market is possible, in which people have higher incomes and more security, and in which hard-work and endeavour are actually rewarded.
Matt is the Vice-Chair of the Economy and Finance Network. He is a final-year Economics student, hoping to work in political or economic advice. He’s from Merseyside, Labour’s true heartland, and writes frequently on a range of economic and political issues.
His interests in Economics focus on microeconomic theory and Public Policy, and his politics are characterised by a near-pathological obsession with returning Labour to government. He tweets at @matthewoulton.