The dream of secure jobs: LEADING ARTICLE

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In each generation a political leader rises to power by appearing to pull off a trick. For Harold Macmillan it was persuading us we had never had it so good, even as economic decline was accelerating. For Harold Wilson, arch tactician, it was persuading us he had a vision of Britain remade by the white heat of technology. For Margaret Thatcher it was making us believe individualism and enterprise had created golden years of growth in the mid-Eighties, rather than low interest rates and inflated house prices.

The trick a politician must pull hoping to command the mid-Nineties is already clear: to combine a belief in markets and competition with a commitment to provide people with a sense of security and well-being. That is the context for the G7 jobs summit that ends today in Lille, France. The paucity of good ideas has been exposed already by the descent of the debate into a ritualistic clash of two false armies, the deregulated approach of Britain and the US, against the regulated approach of continental Europe. Neither provides the answers we are looking for.

The Anglo-Saxon model of deregulated labour markets has a much better record for creating jobs than Germany or France, where unemployment is likely to rise even further in the next few years as they cut public spending to squeeze their economies into the straitjacket imposed by Economic and Monetary Union.

That does not mean our approach is without flaws. Indeed they are all too obvious. The jobs we create are invariably too low quality: low skill, poorly-paid jobs often in the service sector. This is in large part a reflection of our disastrous record in education and training, which lags far behind that of Germany and France.

Britain gets only two-thirds of its young people up to an "intermediate level" - the equivalent of five good GCSEs, while Germany gets 80 per cent up to the advanced level, equivalent to A-levels. Sir Ron Dearing's proposals to reform qualifications, published last week, are testimony to how little has been achieved on this front despite wave after wave of reform in the past decade.

Both John Major and Tony Blair have grasped that this is a theme they cannot ignore. Mr Major told the Tory faithful at the weekend that he recognised the need to combine change with security. But he did not have much to offer and nor can we expect much. Troubling long-term issues such as the funding of higher education have been put firmly on the back burner until after the election. Mr Blair's stakeholding idea, though still dreadfully vague, is an effort to persuade people they have a stake in a society that seems to be moving beneath their feet.

A Germanic model of stakeholding, based on a strong manufacturing sector highly regulated by agreements often negotiated centrally by employers' associations and trade unions, would not work in the UK. It's a non-starter for an open, competitive, decentralised economy that is largely based on service industries in which unions have little clout. Imposing a Germanic model based on co-determination upon British companies will not work. Re-regulating the economy through the introduction of a minimum wage may help some workers in low-paid jobs but it may also reduce overall employment creation without doing much to make society fairer or work more secure. Expecting the welfare system to provide a safety net is unrealistic: voters in work will not stump up significantly more taxes to pay benefits for those out of work.

What might work, however, is stakeholding as a form of contract between the state, the individual and employers. Instead of lifetime employment with a company, there should be lifetime training, retraining, counselling and advice to help people switch careers in mid-life. These lifetime learning accounts - an idea that Labour has already picked up in part - should be contributed to by employers, the state and the worker. Mortgages and health insurance should be tailored to serve people who will be in and out of work, often on short-term contracts.

This is the trick, to combine Britain's entrepreneurial culture and service- based economy with measures of security that do not rely on heavy-handed state intervention or regulation. Either the Conservatives or the Labour Party could pull off this trick. Both are trying. They are still a long way from succeeding.