Ten Direct Interventions in the Labour Market….

I came across an interesting article (flagged by Liam Delaney in a comment left on an article by Karl Whelan on Irisheconomy.ie) by David Bell and David Blanchflower, two economists in the University of Stirling. The title of the paper is ‘What should be done about rising unemployment in the UK’. After detailed statistical and policy analysis they argue that direct interventions in the labour market is neccessary.  However, this requires a large intervention stimulus package in the economy. This condition alone makes it difficult to transfer the policy to the Irish context.  However, their proposed policies provide a good basis to start a debate on labour market policy in Ireland. They make the following ten reccomendations;

  1. The government should undertake a substantial fiscal stimulus focused on jobs, as soon as possible (quite vague)
  2. Provide large cuts in income tax and national insurance contributions aimed at the low paid and the young. For the unemployed mortagage interest payments could also be paid by the government in the form of a loan, with the provisio that it would be paid back eventually.
  3. Increase the education leaving age to 18, starting June 1st 2009 or as soon thereafter that is feasible.
  4. Provide an incentive for those in the age range 18-25 to undertake further/higher education by increasing the numbers available.
  5. Provide an incentive for those in the age range 18-25 to undertake further/higher education by providing financial inducements for them to do so (i.e. grants).
  6. Expand the number of teacher training places as soon as possible with an emphasis on training in further education.
  7. Do direct job creation through increased investment in the infrastructure, with particular emphasis on ‘shovel ready‘ projects that would start quickly. (i.e. school building).
  8. Allow public sector and non-profit organizations to fill available vacancies by providing increased funding for two years.
  9. Temporary, limited and targeted expansion of ALMPs (Active Labour Market Policies).
  10. Provide incentives to encourage the use of short-time working and job sharing as alternatives to redundancy and unemployment. These might take the form of time limited tax incentives.

Bell and Blanchflower predict a substantial increase in unemployment in the UK, particular amongst the young. Thus, their policies are aimed at this demographic. In Ireland, the ESRI predict unemployment will grow to 17 per cent by next year. These 10 broad proposals contain the basis for a detailed policy discussion amongst social scientists, government and the social partners.

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