The jobless who will never fit in our brave new world

It is pure political myth to pretend that all of these long-term unemployed can be retrained for skilled and high-value jobs

The Government had the pleasure yesterday of figures showing another big drop in the number of people on unemployment benefit. Despite the downward path in unemployment over the past 11 months, though, there are about 900,000 unfilled vacancies in the UK at present. This is not enough to absorb all of the 2,200,000 or so who are unemployed (on the standard international definition), but is certainly enough to make a sizeable dent in the total.

Steering the economy towards creating more jobs is one task for the next government. But why can't the unemployed take the jobs that already exist? Removing the structural barriers that prevent this is a separate policy challenge.

There will always be some level of unemployment. William Beveridge, father of the welfare state, thought the jobless rate could not fall below 3 per cent. The reason is "friction" in the labour market. Some people will be in between jobs. Some will be living in different areas from those where there are jobs.

In addition, once the level of unemployment has been high for a while, it tends to be slow to fall: a phenomenon economists have named "hysteresis" sets in. So, for example, people out of work for a long time lose the confidence and habits that enable them successfully to apply for jobs and hold on to them. They might be out of the workplace when a crucial new technology is introduced in their field, whether it is a new computer software programme or a new type of machine tool, and therefore lack the relevant experience.

Governments can only do a limited amount to offset this - training might help, but in the end there is no substitute for experience. However, politicians are very interested in tackling a third type of structural unemployment, that arising from people out of work not having the skills needed to fill the jobs that are being created. Improving education and training - this is the motherhood and apple pie pledge of this election campaign. We're all in favour of it.

There are good reasons for this. A recent publication from the OECD, Employment and Growth in the Knowledge-Based Economy, collects the evidence showing that the part of the advanced economies where jobs growth is fastest is the "knowledge" sector. Statistics on this sector are scanty. One OECD study in 1981 put the size of the information sector at between 14.8 per cent and 24.8 per cent of GDP, with the US and France ahead of the rest. An update in 1986 found that the sector had been growing rapidly.

The report says: "There is a clear trend in the OECD countries towards an economy where the share of the labour force handling tangible goods is becoming much smaller than the share engaged in the production, distribution and use of information." The demands this places on education and the national knowledge-base are clear.

However, equipping the workforce as a whole to meet the requirements of the information economy is one matter. Educating the people who are unemployed now to make them fit for jobs in this brave new world is another. It is an unpleasant fact that there are large numbers of people whom employers consider to be unemployable - any businessman will say so, privately. Some of the unemployed are so unproductive - the young people who have no qualifications and have never worked, or the fifty-something men shed from declining industries - that companies will not take them on at any acceptable wage.

It is pure political myth to pretend that all of these long-term unemployed can be retrained for skilled and high-value jobs. Equally, they are very unlikely to want to accept low-paid jobs that require only low productivity. People's aspirations for what they earn are set according to what they see most other people around them bringing home, and so the dead-end jobs hold no appeal. Low-productivity workers aspire to average-productivity wages. This mismatch is one that will get worse as the average standard of living increases, leaving the chronically unemployed further behind.

The Labour solution, to be set out once again in shadow chancellor Gordon Brown's speech today, is to subsidise the "re-entry" jobs the long-term unemployed might take. The employer will pay a wage that corresponds to the worker's low level of productivity - or perhaps more if the minimum wage is set higher - and the public purse will top it up with in-work benefits. This is fair enough, but it is a social policy as much as an economic one.

The economic solution to the labour market mismatches would be to complement the need to raise the educational and skill standards of the existing labour force as the economy becomes more knowledge-based with finding a new source of labour to fill the dead-end jobs. After all, no matter how fast the high-performance industries grow, there will always be a demand for janitors and hamburger-flippers at low wages. In fact, this is precisely what happens, but it is also obscured by political myth and rhetoric. Whatever they claim, all the advanced industrial economies import immigrants to fill grotty jobs, although by making it illegal or difficult they guarantee that these immigrants are all the more thoroughly exploited.

Sometimes this use of top-up labour has been explicit - for example when the NHS imported Caribbean medical staff in the late 1950s and early 1960s, or when Germany allowed in its Gastarbeiter. But with the scourge of high unemployment, politicians in the European countries have come to pretend that foreign workers are unwelcome even though they are the only people available to fill jobs that few of the native-born unemployed will consider.

It is deeply unfashionable to suggest, on the one hand that immigration might be a good thing, and on the other that it is to everybody's benefit if immigrants accept the bad jobs that nobody else wants. They are not "stealing" jobs because the work does not pay enough to attract the unemployed. Their employers can pay a low wage for low-productivity work. And the immigrants get their feet on the first rung of the economic ladder in the classic manner. The public policy problem - figuring out how to provide an acceptable standard of living for native-born, long-term unemployed workers whose productivity is low - is no better, but no worse than it would be anyway.

Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
News
i100
Arts and Entertainment
Adèle Exarchopoulos and Léa Seydoux play teeneage lovers in the French erotic drama 'Blue Is The Warmest Colour' - The survey found four times as many women admitting to same-sex experiences than 20 years ago
filmBlue Is The Warmest Colour, Bojack Horseman and Hobbit on the way
News
Kenny Ireland, pictured in 2010.
peopleBenidorm actor was just 68
Arts and Entertainment
Preparations begin for Edinburgh Festival 2014
Edinburgh festivalAll the best shows to see at Edinburgh this year
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Financial Analyst - Forecasting - Yorkshire

£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

Business Architect - Bristol - £500 per day

£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

Regulatory Reporting-MI-Bank-Cardiff-£300/day

£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices