Europe expresses fears for New Deal

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EUROPE HAS voiced new worries about the effect of an economic slowdown on the Government's New Deal jobs scheme, and warned that the young jobless may simply return to the dole when their subsidised work ends.

The European Commission's Joint Employment Report, issued yesterday, welcomes the scheme but raises the prospect of serious problems for the flagship policy with the expected economic slowdown.

Under the pounds 3.1bn New Deal, all young people unemployed for more than six months have to take one of five options, which include subsidised jobs, training or environmental work. Because the scheme is relatively new, there is no evidence of employers' willingness to keep them on after their subsidy ends. The report adds: "There is a risk that, in due course, the New Deal could replicate the 'revolving door' pattern of many previous measures."

Nor, the document says, is there reliable data on how many young people would have found work without the deal, or what proportion of the posts offered were genuine new vacancies. There are also worries about the strains an economic downturn will put on the Government's welfare-to- work strategy. The commission notes that the initiative was implemented "at a time of relatively low and falling unemployment", and concludes: "A key question for the New Deal will be whether the apparently high rates of outflow into unsubsidised employment can be maintained under less favourable conditions."

The report queries whether employers' participation, and the "apparent success of the intensive and customised counselling conducted by the personal advisers can be maintained as the scheme expands and the numbers eligible increase" - which refers to concerns outlined in a House of Commons select committee report published in August.

On employment in general, the European Commission says that "performance in the UK looks favourable in relation to EU average". But "long-term unemployment is substantially concentrated among older male workers, some ethnic minorities, lone parents and people with a disability, and is concentrated in a relatively small number of deprived communities".

It also highlights the problems of older workers, and notes that "there remains a considerable imbalance between the financial resources devoted to resolving the problems of youth, and adult, unemployment. Current policies devote perhaps as much as 10 times more funding for each young unemployed person than for an unemployed adult."

Between 1992 and 1997 unemployment in the United Kingdom fell from 10.1 per cent to 7 per cent and male joblessness, at 7.8 per cent, exceeds that of women at 6 per cent. In 1997 male youth unemployment was still higher than the EU average at 10.7 per cent, compared with 9.9 per cent.

At a press conference yesterday to launch the report, Padraig Flynn, employment and social affairs commissioner, said that about 800,000 jobs were created in Europe in 1997, taking employment to its highest level since 1992.