KEEPING people in work is the greatest challenge posed by the credit crunch. The threat of more job losses is clear despite the multi-billion dollar bailout from George Bush’s outgoing administration, combined with efforts in Britain and elsewhere to get the economy back on track.
While the autumn’s headlines in this country have been about the Government’s welfare reform plans to get people back into work, the mood of the markets shows that keeping people who are now working in their jobs may be the biggest challenge for ministers.
There is one policy idea from the days of the 1970s that could help to keep jobs going. The policy, if agreed to now and in advance of the feared round of new job cuts in the spring, could help save a fair number of posts.
Back in the ’70s, arguments waged between trade unions and business on the level of tax. Corporation tax and capital gains tax were introduced but, when the ’70s recessions hit, one scheme brought business and the unions together. This was short-time working assistance. It worked in the same way that statutory sick pay operates today
Basically, with firms thinking of cutting shifts and getting rid of agency staff, such a scheme now would compensate firms to a limited extent to keep workers in their jobs.
This would be good for employees, since it keeps them earning and would also help boost consumer confidence.
It was also be good for businesses, as it would enable them avoid the upfront cost of redundancy and, by keeping their workforces intact, they would be in a better position to take advantage of the upturn in the economy when it comes.
And it would be good for the Government, as the scheme is cheaper than paying out benefits to newly unemployed people and their families.
This scheme was, basically, repeated during the recessions of the 1980s. And now the Dutch government is going down this path. It has decided to provide temporary financial support for firms which will keep people in their jobs while cutting down on their working hours.
This policy would be critical in Britain’s industrial heartlands. Manufacturing cannot afford another crisis and with the push by some bosses to cut shifts and jobs, this scheme could stave off the worst of the economic crisis.
It is not just manufacturing that can benefit. Service sector jobs, including at call centres, hotels and in all kinds of financial services jobs, need not be lost when the full impact of the credit crunch comes home to roost in 2009.
Bailing out the banks was one step to keep the economy afloat. Avoiding the nightmare scenario of millions on the dole must be the top priority for the left.
This scheme may not stop all the job losses that may occur next year. But it may stop enough jobs being lost to avoid a serious tipping point for our economy – helping to keep many families going at this difficult time.
If Labour took up this policy today, many workers might have cause to thank the obscure civil servants who dreamed up this scheme all those years ago.
James Watkins is head of an economic development body and a member of the Labour Housing Group’s executive
