Rebuilding the intergenerational contract

The gulf between the earnings of younger and older people has increased by 50% in the last 20 years, leaving young workers struggling to survive. Does this mean the Intergenerational contract is breaking down?

The TUC report, Stuck at the start: young people’s experience of pay and progression, reveals that the pay gap between over and under-30s has grown from 14.5% in 1998 to 21.9% in 2017 – meaning that younger workers get on average £2.81 per hour less than their older colleagues.

And it's not only about pay. The number of 21 to 30-year-olds working in precarious, often low-paid work has exploded, particularly in private care and the hospitality sector. A YouGov poll of 1,500 young people carried out for the report found that only three in 10 felt their current job made the most of their experience and qualifications; four in 10 had been given little or no training in the last 12 months, while one in five had worked on a zero-hours contract in the last five years.

As the TUC's Frances O'Grady puts it; “We’re creating a lost generation of younger workers. Too many young people are stuck in low-paid, insecure jobs, with little opportunity to get on in life,”

So why don't young people just get organised? Some argue that young people can’t organise in the workplace because they’re too narcissistic. They can’t afford houses because they eat too many avocados. They don’t need living rooms because they’re always out eating £15 burgers. They’re anxious because they’re snowflakes.

These arguments simply miss the point. As Zoe Williams argues in the Guardian, there are structural reasons like student debt which means that buying a house is out of the question for young people who don't have the bank of mum and dad to support them. The “gig economy” is a euphemism for chronic precariousness. Internships are no more than the repudiation of the precept of a fair day’s work for a fair day’s pay. Apprenticeships are code for exploitation.

And there is no shortage of activism amongst young people. In particular, young trade unionists are at the cutting edge of new campaign techniques. They are tuned into party politics, appreciate the wider labour movement and give confident speeches to the public. Jeremy Corbyn’s overwhelming support among 18- to 24-year-olds is written off as naivety by those whom it pleases to believe that anything not resembling the status quo is unrealistic. 

The Resolution Foundation has taken a detailed look at the intergenerational contract.  Their report argues that the intergenerational contract works because everyone puts in and everyone takes out. We are happy to support and feel obligated to older generations because we believe and expect that we will be treated the same when we are old. We support children as they develop just as we were supported and nourished when we were young. 

We celebrate the good times and deal with the nation’s challenges together, across the generations. This feels natural, but that does not mean that we can take the intergenerational contract for granted. Increasingly, there is a sense that it is under threat, on pay, working conditions, housing and pensions. Young people are making no income progress and accumulating less wealth.

The recommendations in the report are politically challenging but should stimulate a debate. The costs of social care should be met by a property-based contribution towards care costs. There should be greater employment and housing security while turning around our housing crisis. A legislative framework for ‘collective defined contribution’ pensions that better share investment risk. 

Possibly the most radical recommendation is abolishing inheritance tax and replacing it with a lifetime receipts tax that is levied on recipients with fewer exemptions, a lower tax-free allowance and lower tax rates. The extra revenues should support a £10,000 ‘citizen’s inheritance’ – a restricted-use asset endowment to all young adults to support skills, entrepreneurship, housing and pension saving. This would be an important step towards breaking intergenerational inequality.

People are increasingly concerned about the prospects of other generations within their families and communities, and electoral turnout gaps by age are narrowing. We need a policy agenda that addresses the concerns of both old and young, and in so doing rebuilds the intergenerational contract. We need to step up to the challenge of building a sustainable society.

Job losses, an ageing workforce and why its going to get worse

50,000 jobs have been lost from the Scottish public sector workforce and a further 60,000 could go by 2019. Those who are left are getting older and young people are the losers.

I have been crunching the latest workforce data published before Christmas, together with other reports and forecasts on public sector staffing levels. There are three key points to make.

Firstly, the workforce continues to shrink in total and as a proportion of the Scottish workforce. The public sector as a percentage of the total Scottish workforce has fallen to 21.5% (547,300 headcount), barely one in five of the workforce. 49,500 jobs have been lost in the public sector across Scotland since the financial crash; 4,400 in the last year. That has an inevitable impact on the quantity and quality of public services, as well as the local economy. Public sector workers spend in their community and this, together with the wage freeze, is a major cause of the slow economic recovery. The big numbers have come from local government, although proportionately colleges have been hardest hit.

Secondly, the workforce is getting older. In 2013, the average age was 44 years and four months compared with 43 years and nine months in 2009. The biggest losers are young people, with those aged under 20 falling by 25%. Those aged between 50-59 actually increased by 5%. This is creating a retirement and skills blip that is likely to get worse if job losses continue under austerity economics, as recruitment freezes keep young people out of public service. Older workers on small average pensions are less likely to retire early because they will need to work on due to living costs and the later pension retirement age. They are also more expensive to release under early departure schemes that are anyway declining. The big job losses have actually come from natural wastage.

Thirdly, a further 60,000 jobs could be lost over the next five years. This year and next the numbers will be less severe, but after that they are forecast to increase dramatically. This number is extrapolated from the OBR and IFS forecasts for the UK, taking into account job losses already inflicted on Scotland. It is always difficult to be precise with this sort of calculation, but previous forecasts have not been far off the mark. It could actually be worse, because future cuts are likely to be concentrated in revenue spending as the CPPR paper highlights, and that is before any deliberate shift of spending from capital to revenue as the Scottish Government favours.

All of this creates very special problems for the workers who are left behind, as they try to keep the plates spinning on deteriorating Scottish public services.

Welcome free school meals but don't forget the current service

There was a welcome announcement by the Scottish Government yesterday on the extension of universal free school meals to all children in Primary 1, 2 and 3. I was a signatory, on behalf of UNISON Scotland, to the call by a range of education organisations for the Government to use the Barnett consequentials of the similar decision in England in this way. UNISON Scotland has a long-standing commitment to universal free school meals for all children.

The pilot trials show that universal provision significantly improves the take up of school meals, even amongst those already entitled to them, due to a positive peer effect. It also boosts learning and attainment and helps tackle health inequality. A study undertaken at Dundee University concluded that the current system of means testing, “fails to deliver welfare to the poorest in society”. While it clearly does have a positive impact on family budgets, I regard this as a secondary consideration because there may be other, possibly better, ways of using the budget in this regard.

School meals are therefore a service that benefits from universality. I accept that is not the case for all services as we have always had a mixed economy. Of course, despite the spin, neither does the Scottish Government, as they don’t apply the principle consistently. Access to justice being a good example of universality being abandoned when it suits them.

A point lost in yesterday’s debate is the state of the current school meals service. UNISON Scotland surveyed members working in catering only recently and found that 54% say there have been major or severe cuts in the last 3-4 years. A total of 49% expect further major or even severe cuts to their service. Top concerns are increased workload, reduced staffing and the impact of cuts on the service. Many believe service levels are only being maintained because staff are working beyond the call of duty, under high pressure, with heavy workloads. This is also reflected in the 23 improvement notices served on school kitchens across Scotland last year. 

UNISON would also support a much larger expansion of quality childcare provision than that announced yesterday, welcome though it is. The strange decision to use a devolved power to illustrate the possibilities of independence inevitably creates a political rammie over spending priorities. However, I am not convinced that the case is made that one is necessarily more effective in tackling poverty than the other - so spreading the jam is not an unreasonable policy. Equally, the argument that further childcare provision is dependent on tax powers is very weak. If we followed that principle, Holyrood would do nothing to promote employment because the tax revenue doesn’t directly come to Scotland. 

So while we should welcome yesterday’s announcement for school meals and childcare, let’s remember current services are under considerable pressure and struggling to deliver a quality service. While politicians love to announce new services – the existing provision has to be maintained as well.

Workfare schemes ruled unlawful

I was on the BBC ‘Call Kaye’ programme this morning to discuss the Court of Appeal ruling that the UK Government’s “Back to Work” schemes are unlawful and the regulations must be quashed. The ruling is a big setback for the Department for Work and Pensions (DWP) who have driven the controversial reforms.


Predictably the Tax ‘Dodgers’ Alliance also turned up to tell us that this was a wonderful scheme in the interests of taxpayers and the unemployed. As a business funded organisation the provision of free labour was obviously just a bonus!

Well it isn’t a wonderful scheme and these are the main reasons why:

• In the broadest sense of the phrase this is forced labour. The Community Action Programme, Work Programme and Mandatory Work Activity Scheme (the clue is in the name) are mandatory schemes and jobseekers will lose their jobseeker’s allowance if they do not participate.

• Job Seekers Allowance (JSA) is paid to support people whilst they seek employment. It is not payment for work, not least because the hourly rate would be as little as £1.78 per hour.

• The UK government’s own international research shows it doesn’t work when unemployment is so high. Youth unemployment in Scotland has doubled. Their study said, “Workfare is least effective in getting people into jobs in weak labour markets where unemployment is high.” There is also no evidence that these placements turn into significant real jobs.

• In practice it’s simply job substitution, often for large profitable retailers. Better employers have pulled out because they don’t want to be associated with it. Glazing firm CR Smith are quoted in today’s Herald, "If we are to give people, and particularly young people, a meaningful work experience, it should be through a proper paid job. The sense of reward that comes, in part, from being paid for your efforts is fundamentally important to anyone's motivation to strive to do more." Very well put.

• Substituting forced free labour for waged workers damages the economy.

• The schemes do not simply apply to the long term unemployed, so the argument that it gives the unemployed some sort of focus doesn’t apply. People who rightly feel they are being exploited are not being motivated. And by the way, the scheme doesn’t apply to ‘benefit scroungers’ because they are debarred from these schemes as they are not seeking work.

So let’s get the facts right. Full credit to Public Interest Lawyers for supporting the pursuers in this case. And to the callers on this morning’s programme, who told us of their own experiences of being exploited on these schemes.

Youth Unemployment

I was speaking last night at the AGM of our Skills Development Scotland Branch on the subject of youth unemployment. Hard to think of an audience that knows more about the subject than careers officers in this branch.

The jobless rate in Scotland stands at 231,000, with 88,000 falling into the 18-24 year old category, rising to over 100,000 when you include 16-18 year olds. The highest figure for a generation and an 83% increase since the economic downturn. Youth unemployment in Scotland is 3% higher than the UK average and increasing more rapidly. This is caused primarily by the recession and the UK government's austerity measures that are taking demand out of the economy through public service cuts, just at the time when they are most needed.

Youth unemployment in Scotland can be broken down into three groups:
• 35,000 in education while looking for work.
• 21,000 with minimal or no qualifications coupled with other disadvantages
• 44,000 with reasonable qualifications who in a stronger labour market would probably be in employment.

Let’s start by looking at some of the reasons why should we care about unemployment:

• Because of the lost output involved. During a long period of unemployment, workers can lose their skills, causing a loss of human resources to the economy.

• Unemployment is a stressful life event that makes people unhappy. It increases susceptibility to illness and loss of self-esteem, leading to depression and a higher propensity to commit suicide. It can also reduce life expectancy.

• The long-term unemployed are at a particular disadvantage trying to find work and the effects of unemployment appear to depend a lot on how long the person has been unemployed for.

• Unemployment while young, especially of long duration, causes permanent scars rather than temporary blemishes. For the young a spell of unemployment does not end with that spell; it raises the probability of being unemployed in later years and has a wage penalty. These effects are much larger than for older people.

• As unemployment rates increase, crime rates tend to rise, especially property crime. Studies have found that youth unemployment and adult unemployment are both significantly and positively related to burglary, theft, fraud and forgery and total crime rates. For each of these offence categories the relationship between youth unemployment and the specific crime was found to be somewhat stronger.

Unemployment among the young therefore contributes to the intergenerational deprivation highlighted by the Christie Commission and subsequent public expenditure. The lifetime cost of a single cohort of young people failing to make the transition into regular employment is estimated be in the region of £2 billion. It also drives inequality and the associated impact as set out by Wilkinson and Pickett in The Spirit Level. Recognising that it is not the only issue in cities like Glasgow as Carol Craig has highlighted in Tears that Made the Clyde.

What should the UK government be doing with the budget coming up this month? First and foremost we need a co-ordinated plan for growth, with a focus on tackling record levels of youth unemployment. We risk losing a generation of talented and highly skilled youngsters to joblessness and stunted careers unless the UK government rapidly increases investment in quality employment programmes.

The current cut-price, poorly-targeted and unpaid work experience schemes are not helping enough young people back into jobs so the government should introduce a guarantee of paid work or training for anyone young person who has been out of work for at least six months, as set out in the TUC submission on the budget. That submission also says that support for young people should not be restricted to those out of work and calls for the introduction of a new youth credit for all 16-24 year olds to boost access to training, work placements or progression into better jobs.

And what about the Scottish Government's response? They have appointed a new minister for Youth Employment who has published a draft strategy that says there should be:

• a clear and targeted approach to support young people as they look for jobs

• the development of opportunities within the apprenticeship programme

• targeted support to help young people get jobs in the energy and the low carbon economy

• support through the My Work Coach, which is under development by Skills Development Scotland

• and financial support to employers to encourage them to employ young people from disadvantaged groups

Through Opportunities for All the Scottish Government is planning to ensure that every 16-19 year old not in employment, education or training (NEET) has access to a suitable place in learning or training. In 2012/13 and in each year of the current Parliament they will offer 25,000 Modern Apprenticeship opportunities within an overall total of 46,000 training places.

There are many good aspects of this strategy but it is not consistent. The Scottish Government has protected Higher Education spending but Further Education budgets have been cut by 13.5% over the next three years - a £70million cut. The extra £15million recently announced still leaves a cut of at least £55million while the guarantee of a job education or a training place for all those aged 16 to 19 will restrict places available for those out-with this age group unless more places are available. Careers officers this evening pointed out that it is often introductory courses that are being cut. The very courses accessible to those young people without qualifications.

School leavers unable to find work, adults seeking retraining and cuts in courses mean there is increasing demand for fewer college places. Young people in particular are finding that increased competition leaves them unable to get places on college courses that similar young people have accessed in the past.

My audience of careers officers are the key professionals trained to ensure that people are able to make the right choices throughout their working lives. The careers service has seen a 50% increase in adults accessing their services during this recession with many adults seeking new skills as they lose jobs or see career prospects cut off by cuts. The careers service is facing increasing demands at a time where budgets are very tight. In fact SDS has been cut more deeply than other services with a further 150 posts going this year.

They are concerned that there is not adequate funding to meet the commitment of a place on training or work for all 16-19 year olds. If the young person is to benefit in the long term it needs to be appropriate and lead to a long term future job. It should not just be about the politics of keeping youth unemployment figures low.

New technology has allowed more people to access careers information more easily, but the My World of Work website is still only a website. New job titles like Work Coach don't even have job descriptions and there is an obvious suspiciion that this is simply window dressing to cover more service cuts. 

Many people face multiple barriers to employment and need the focused support of careers adviser. This involves in depth work with individuals who have complex needs. In the 14-19 age group many young people have already disengaged from education or are in the process of doing so. Guidance teachers therefore cannot replace the role of careers staff. Careers advice is a specific role and requires a range of skills and knowledge. It is about a lot more than showing clients some college prospectuses and telling them to clean up for job interviews.

Members are particularly concerned about Activity Agreements. The funding of the pilot scheme was much higher than the level available for implementation. Currently the focus appears to be more on having a positive outcome on paper rather than a genuine career path. Members feel they are just being used to mask youth unemployment.

In conclusion youth unemployment is a symptom of the disastrous economic policies being pursued by the ConDem coalition. In any recession it is usually the young that suffer the most. So the best strategy for youth unemployment is a growth strategy as set out in the Better Way campaign. This will be reinforced by the STUC at the demonstration at the Scottish Conservative conference in Troon on 24 March.

However, the Scottish Government does have powers to support young people and minimise the long term effects of unemployment. The draft strategy has many good features but it will be undermined by college and careers service cuts.

Youth Underclass

The Prince's Trust youth charity has released a report today warning that poverty is creating a "youth underclass" in Scotland. The survey, carried out by YouGov revealed that 12% of young people in Scotland feel "people like them don't succeed in life", while 19% said they believe "few" or "none" of their goals are achievable. It also showed those growing up in poverty were more likely to feel this way - which the charity said highlights an "aspiration gap" between the UK's richest and poorest people.

Let me add a few hard Scottish statistics to the survey:

• The gap between the bottom 20% and the average in learning outcomes has not narrowed in the last ten years.
• The percentage of children leaving school directly into unemployment has risen to 22% for the bottom 20% of the young population of Scotland.
• Youth unemployment has risen from 13% to 20% in the last 3 years and over 70% of that group are long term unemployed.
• Half of all young people in Scottish prisons have been in care. This rises to 80% when looking only at those convicted of violent offences. Despite just 1% of all Scottish children having been in care.

This report from the Princes Trust is helpful in highlighting this issue and should act as a warning shot that we don't want to create another 'lost generation', as happened during the Thatcher years. In fairness to Iain Gray (and not many are at present!) this was something that he tried to get into the policy lite election debate.  However, my concern is over the Trust's emphasis on "an aspiration gap between the UK's richest and poorest people."

The key issue is not 'aspiration', it's poverty and inequality. The poorest tenth of the Scottish population now have, between them, 2% of Scotland's total income. In contrast, the richest tenth have around 29% and that has grown from 25% in the last ten years. If we look at the long term trends, Scotland was becoming a slightly more equal society during the 50's and 60's, but this started to go in the wrong direction in the Thatcher years and hasn't stopped since.
 
So what should we as a nation do to address this issue? 
 
In the short term we can stop cutting the public services that are trying to at least mitigate the impact of poverty on young people. Council youth services rarely have a statutory basis and as a consequence have been early targets for cuts. The same is true of the services provided by the voluntary sector in this field. Many aspects of child care are also grossly underfunded.
 
The medium term challenge is preventative spending in early years. Susan Deacon's report is particularly helpful in this regard. The NSPCC have also highlighted the risk of relentless intergenerational deprivation. If we put as much effort into early intervention as we have into criminal justice and anti-social behaviour - the results could be transformational.
 
In the longer term we have to tackle the underlying causes of poverty and inequality. Not just because it is right to help those at disadvantage. Not just because it it will avoid the huge cost on the public purse of this failure demand. But most of all because more equal societies do better on every measure including economic growth. So it is in all our interests, rich and poor, to face up to this and make equality the guiding light of public policy in Scotland.

 

 

 

 

 

Young people and public spending cuts

The headlines this morning focus on the impact of a tightening jobs market on graduates. Competition in the jobs market is fiercer now than for the first "recession" generation of students. Last year there were 48 applications for each vacancy, now their are 70. The number of applicants chasing each job is so high that nearly 78 per cent of employers are insisting on a 2.1 degree, rendering a 2.2 marginal and effectively ruling out any graduates with a third. In 2008, when the economy was buoyant, just 57 per cent of employers insisted on a 2.1 or higher.

This reinforces the concerns we have previously highlighted on the impact of public spending cuts on young people. There are many young people (mature graduates as well) who have been studying for a degree and professional qualification, with the reasonable expectation of a job in the public sector. With jobs being lost and equally important, an almost blanket recruitment freeze, those jobs will not be available. There can be nothing more demoralising than having studied for years, only to find that the effort and cost is wasted.

And it is not only graduates. There will be a generation of young people who would have an expectation of an apprenticeship in a public sector occupation. Again these will at best find a job with little or no training or prospects. At worst they will join the growing numbers of the young unemployed, proportionally higher than other age groups.

Cuts impact on young people

I gave a presentation on the public finances to our Young Members Committee today. The election campaign is beginning to clarify the impact of Tory cuts on Scotland with the announcement that they would be looking for £5.1bn of cuts (that's around 15%) to the Scottish budget. That is far higher than the estimated £3bn in the mainstream post-UK Budget estimates.

At least not all business organisations have lost the plot on public spending. The Scottish Chambers of Commerce have highlighted the importance of public spending to the economy, particularly on infrastructure contracts. A point reinforced by the construction industry. However, we have the completely daft Institute of Directors calling for savage cuts in public spending, whilst at the same time demanding more public infrastructure spending!

The overall financial position is of course the same for all age groups, but there are particular concerns for young people.

Youth unemployment has gone up by 89% over the past few years. Although the rate of job loss came down rapidly last year to 17%, that still leaves a large group of young people without jobs. Of particular concern to UNISON is the impact on young people who have been studying for an entry qualification for a public service job. Most public service organisations are freezing posts and that hits new entrants particularly hard.

Last year there was a welcome increase in Scottish Government funding for apprenticeships creating 20,000 jobs. This year that is likely to be cut to 15,000. Another way of increasing the numbers of apprentices would be to specify a requirement for apprentice numbers in public contracts. This could be particularly effective in big public construction contracts.

We are also concerned that young people could be badly hit by local government service cuts. For example, Community Education, including youth work, is being targeted for cuts as are libraries and some social work intervention services.

On a more positive note UNISON membership amongst young people has been increasing proportionately quicker that other age groups. We have a great group of young activists who understand the issues and have a real appetite for campaigning. This is really good news for the future of the movement.