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Ian Brinkley
Economic Advisor
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Ian Brinkley

The party political manifestos and work

Authors: Ian Brinkley

16 April 2015

As the clock ticks down to May 7th, the political parties have unveiled their Manifestos. In this blog I focus on what the measures might mean for the world of work drawing on the published manifestos from the Conservative, Labour, and Liberal Democrat (Lib-Dems) political parties. It is not intended to be comprehensive and I have not read every word in all three manifestos – life is too short. I have instead tried focused on some of the main work related policy areas that TWF has commented on in recent months and where all three main political parties have something to say. Where appropriate I have offered some commentary, but this should not be taken as endorsement or damnation of the policy or political party concerned.

Full employment

The Conservative Party says that over the next Parliament it will help business to create 2 million new jobs as part of the commitment to return to full employment. The figure is plausible as it assumes the job generation of the past five years will continue over the next five years. However, the Office for Budget Responsibility expects the economy to generate only 0.9 million new jobs between 2015Q1 and 2020Q. The difference is that the OBR forecast assumes some recovery in productivity and therefore wages. The Conservative Party ambition is therefore only likely to be delivered if productivity performance remains poor or the economy grows faster than the OBR is forecasting. The Labour Party makes no specific claims on the rate of job generation.  The Lib-Dem manifesto includes a chart with the OBR employment forecast to 2020.

Youth Employment

Both the Conservative and Labour parties say they will introduce a Youth Allowance for 18 to 21 year olds claiming Jobseekers Allowance.  The Labour Party says it will offer a Compulsory Jobs Guarantee for all young people unemployed for more than 12 months who would have to take the job or lose benefit. The Conservative Party says that that the Youth Allowance would be limited to six months, after which young people would have to take a training place or do community work for their benefits. The Conservative Party says it will abolish long term youth unemployment. The Lib Dems would increase work placements.

Both the Labour and Conservative parties focus on a relatively small group of young people claiming benefits. Latest figures show just 26,000 of 18 to 24 year olds had claimed benefits for more than twelve months and just over 50,000 have been claiming for between 6 and 12 months.  The figures for 18 to 21 year olds will be even smaller.

A different measure derived from the household Labour Force Survey suggests that there are just over 180,000 people between the ages of 18 and 24 have been out of work for more than 12 months and 260,000 for more than six months. Those outside the benefit system are much harder to influence through policy measures: the Conservative Party’s pledge to abolish long term youth unemployment looks ambitious.

The Conservative Party also says it would end automatic entitlement to Housing Allowance to discourage young people leaving home just to claim benefit. The logic in terms of the labour market is not obvious and it is not clear what the criteria would be for refusing benefit. For example, it would be counter-productive if it also discouraged young people moving to areas where jobs were more plentiful.

All Parties are committed to expanding apprenticeship provision. The Conservative party says that it will create another 3 million new apprenticeship places. The Labour Party does not give a specific figure but says that new apprenticeship will be “gold standard” and focused on new entrants.  The Lib-Dems say they will double the number of businesses hiring apprentices, offer more high quality apprenticeships and cut the cost of bus travel for young people.

However, the number of apprenticeships on offer depends on employers being willing to create them in large numbers. The Labour Party says it will create more apprenticeships in the public sector and require large firms who win public sector contracts to offer apprenticeships. Employers are to be given more control over funding in return for a commitment to improved provision and new powers will be granted to employers who free-ride.  The Conservative Party will abolish national insurance payments for employers offering apprenticeships for the under 25s. The Lib-Dems will extend the reach of the existing Apprenticeship Grant for Employers.

The National Minimum Wage and the Living Wage

The Conservative Party proposals on the NMW preserve the status quo, with the expectation that the Low Pay Commission (LPC) will deliver an NMW of £8 an hour. It also says it would encourage firms to pay the Living Wage (LW) although there is no specific measure proposed. However, they also say that people on the NMW who worked more than 30 hours a week would pay no income tax. This will benefit some NMW workers, but my back of an envelope estimate is that they would have to work at least 35 hours week to benefit given the commitment to increase the personal allowance to £12,500.

The Labour Party has taken a more interventionist approach to encourage the LPC to go faster, with a commitment to an NMW of somewhat more than £8 an hour by 2019.  The Labour Party’s subsidy will encourage some firms to sign up to the LW who would not otherwise have done so, although it is unlikely the impact will be very large. The more active use of public sector contracts by local authorities might have more bite in some areas, such as social care, although it is unclear who would pay the higher wage bill.

The Liberal Democrats would also preserve the status quo on the NMW. They would establish an independent commission to review the level of the LW and from 2016 onwards make central government adopt the LW and encourage other public sector employers to do the same.

Zero hours

The Labour Party says that it will restrict the use of zero hours contracts (ZHCs) by allowing those workers who wish to do so to convert them to a regular contract after three months. The Lib-Dems would allow a right to request and consult on a right to convert to a regular contract after a period of time.  The Conservative Party would maintain the status quo. My previous blog goes into the detail on the pros and cons of more restrictive policies for ZHCs.

Trade unions

The Conservative Party has a number of proposals to reform trade unions, of which the most notable is a higher threshold for ballots for strike-action in four sectors of the economy – health, education, transport, and fire services.  The Labour Party and Lib-Dems have no specific proposals.

It is not clear what problem this particular measure is trying to solve. Strike action is at historically low levels and the larger disputes that attract the headlines are often for very short periods. Even the co-ordinated industrial action by some public sector unions in July 2014 resulted in less than 10 per cent of the public sector workforce in dispute, according to the official statistics. In most other months the number of public sector workers in dispute is tiny. Moreover, there are many ways for workers to take industrial action short of a strike. Overall, it is hard to see how these measures help improve industrial relations in a period likely to see continued pressure on both public sector pay and employment.

Migration

Both Conservative and Labour assert their support for an open Britain and the benefits of migration –but their Manifestos offer variations around a theme of strictly limiting non-EU migration and discouraging some non-EU migration through a mix of measures that restrict benefit entitlement and access to social housing. Both parties would require those employed in the public sector to pass a basic English test.  Both would impose more restrictions on short term student visas and generally tighten up the regulation and monitoring of migrants flows. The Conservative Manifesto does not include a specific reference to the net migration target set by the previous Coalition government. The Lib-Dems focus on strengthening the effectiveness of border controls.  It is not obvious that the Conservative and Labour party policies have been greatly influenced by the concerns of universities and some multi-national companies about a more restrictive and less welcoming stance on students and overseas workers.

Overview

A quick snapshot of the manifestos does not suggest work is going to be a big source of policy differentiation between the main parties, though there some important differences in detail and in the messaging. The Conservatives have the most explicit claims on job generation and a return to full employment, though the other parties would no doubt say that full employment is a shared objective implicit in their Manifestos. Labour can claim the firmest commitments on the NMW and zero hours contracts, while the Conservatives have a distinctive policy on trade unions.  The focus on a sub-set of young people claiming unemployment benefits by both the Conservative and Labour Party is disappointingly narrow. More positively, the commitment to increased apprenticeships by all three parties is very welcome in an area that could benefit from a degree of cross-party policy stability. However, there are differences in implementation and Labour and the Lib-Dems are much more specific about how they would raise standards with Labour shaving it in terms of the detail.  The Conservatives have the more restrictive approach to immigration, although in practice many of the measures proposed are similar to those advocated by Labour and the overall difference is not great.