On youth unemployment

What can one say, except it’s only going to get worse?

It will until an alternative is adopted.

That alternative is possible. None of this unemployment is necessary. And those young people need not have blighted hopes. That’s what’s so depressing about all this.

He\’s absolutely right you know, this needn\’t happen.

Us bastard capitalist neoliberal pig dogs said that the effect of a minimum wage would be to push the lowest skilled people out of the employed, into the unemployed, part of the labour force.

We now have that minimum wage and in our first proper recession since we have had, we\’ve got 20% unemployment among the least skilled, the young, as opposed to 8% more generally.

We said this would happen and lo and behold, it has come to pass.

The solution is therefore obvious: abolish the minimum wage.

16 comments on “On youth unemployment

  1. Quite. And hang all the socialists to empty some jobs for the young. Poor economics, I know, but a good social recipe.

  2. ……Poor economics, I know, but a good social recipe……

    Not even poor economics, the socialists are those whose inputs are worth more than their outputs, ie. they are wasting valuable resources.

  3. There’s an intricate entanglement with the welfare system and working wage at that end of the pay scale. You can’t just poke around at one particular thing in isolation (I think you made this point to me, Tim, several years ago).

  4. Dunno if the minimum wage is too much to do with it. IMV it’s more about the sustaining of massive economic distortions by “stimulus” spending and so on.

    Murphy’s solution is to extract another £120bn in taxes from the productive economy, btw. It will only take another £1bn spending on tax collectors apparently.

    The reality is, astonishingly little of a productive economy is left now. Even the apparently wealthier parts of the country- “The South East Bubble” are primarily just driven by fiat forced into the economy by the government thru the financial services sector, primarily in London, hence the bubble surrounding it.

    It seems reasonable to suppose that there has been no genuine growth for quite a number of years now, even if GDP (a measure of spending, not production) has risen. We may already be past the “tipping point”, to use a popular phrase. The Crash just revealed how poor we really are.

  5. There’s also the small matter of our employment laws. If it’s going to be difficult and expensive to fire people, you tend to think a very long time before hiring them.

  6. I can’t see the minimum wage as responsible for youth unemployment. The youngsters want nice jobs with prospects (you can hardly blame them) and they have an expectation of such.

    There’s an acute shortage of nice jobs for the kids and I don’t think that’s attributable to the minimum wage.

  7. It’s a point made frequently by some, including Andrew Neil on the Daily Politics this morning. Wherever I go in London, all hospitality jobs i.e. cafes, restaurants, hotels etc. are filled by foreigners whether European or from further afield. If there’s such capacity in London to lure thousands of foreigners to work here, then why haven’t these jobs been filled by our indigenous youth whose lack of employment goes towards this 20% figure?

    I’ve surmised that the benefits system must make it comfortable enough for them to continue without making the leap say to travel to a larger city and rent a room or that the earnings that those from poorer countries can make are much larger for them relative to what they could make in their home country. I was just wondering if anyone had a take on this, as it seems pretty important to me.

  8. Joseph :
    I think your point about the relative advantage to immigrants of a British minimum wage is correct, that and johnny bonk’s point about British youth wanting nice jobs combine to explain high youth unemployment, I doubt if the minimum wage is a large factor in itself. Either the benefits system has to be drastically reformed, don’t laugh, or young people have to lower their expectations, it might help if they had the same attitudes to service as immigrants as well.
    From a young person’s point of view another problem with the minimum wage is that it effectively sets the going rate for a job, employers don’t have to bother about attracting the best workers with higher wages, when did the left decide that limiting a worker’s right to look for the best deal was a bad thing ?

  9. “If there’s such capacity in London to lure thousands of foreigners to work here, then why haven’t these jobs been filled by our indigenous youth……..?
    To be fair on the (indigenous)yoof a lot of these jobs won’t be open to them. Pretty well all the businesses you’ve mentioned are run by immigrants & they tend not to recruit through normal channels. When did you last see an opening for a waiter in an Indian/Chinese/Turkish/Greek…….restaurant advertised in the paper? Ditto shops, hotels, service stations.
    When I started out I had a lot of friends who aspired to be musicians, artists, actors etc. but supplemented their incomes working in jobs like that. Couple of guys ended in big bands were working at Walls the food factory in W.London till the big time happened. Any surprise so much music, theatre is so divorced from reality? Few of these people now ever have a proper job. No experience of real life to draw on when they come to act, write lyrics.

  10. Tim,

    The 16-24 year old unskilled demographic is that most vulnerable to the effects of mass immigration. I don’t reacll hearing the ‘I’ word in relation to any of today’s debate.

  11. Martin :
    I’m happy to discuss the ‘I’ word. I’m less than convinced that the kind of large scale immigration we have seen in the last decade or so is a good thing but I don’t see any way round it. The alternative is severe immigration control and a protectionist economy, that never ends well. Would all these jobs be snapped up by young Britons if the immigrants went home ? Would all these jobs even be there in fact ?

  12. If it’s going to be difficult and expensive to fire people

    But it isn’t difficult or expensive to fire people in the group we’re taking about.

    If you’ve had someone on board for less than a year, which is the relevant time period for unskilled yoofs, it’s easy and cheap to fire them. The *only* thing you need to do is state the reasons for firing them in terms that aren’t obviously racist or sexist, which is easy as long as you’re not a total muppet.

    Laying off people who’ve been working for the same company for 10 years – now *that*’s an expensive pain in the arse.

    …and that’s a major part of why youth unemployment is a problem at the moment. Companies have been holding off making their existing staff redundant as much as possible, both because it’s expensive and because they know they might well need them whenever the economy recovers.

    And, ultimately, because laying off someone who you know (as opposed to ‘sacking them for being an inept pisstaking idiot’, which is highly enjoyable) is a much nastier experience as a manager than not hiring someone you’ve never met.

    So companies have been freezing hiring, apart from hiring to replace people in key (ie, mostly, “skilled and couldn’t be done by a school-leaver or a grad”) positions who leave/emigrate/retire/die.

    And that’s obviously going to continue until we get some indication of sustained economic growth. In the meantime, people who’re newly arrived on the labour market are a bit stuffed, because the only new positions available are dead men’s shoes.

    (side point: the 2000s immigration boom has actually helped reduce the effect of the recession on unemployment rates, because a great many Eastern Europeans have gone home now the work outlook in the UK is crap).

  13. bloke in Spain said: “To be fair on the (indigenous)yoof a lot of these jobs won’t be open to them. Pretty well all the businesses you’ve mentioned are run by immigrants & they tend not to recruit through normal channels.”

    Is Travelodge run by immigrants? Last time I checked in, the staff were Polish and Estonian with a few Lithuanians.

    Is Pizza Express? My last waiter was from Albania.

    It is surprisingly rare to eat anywhere in london and get served by someone who was born in the UK.

    Even the front-of-house staff at the Wigmore Hall are mostly Czech, although there do seem to be more British working there since this time last year.

  14. I was taught minimum wage in A-level economics in 1998, just before its introduction. Sadly, my teacher was a borderline Marxist who actually refused to teach Milton Friedman’s theories at all, he literally would only teach Keynes! As such, he was heavily in favour of the MW.

    At the time, I knew it didn’t make sense but of course the debate was pretty much outlawed. Still argued against it in my exam though, got an A so in your face Mr. Rennie. Anyway, it always seemed contradictory to me, reducing employment despite being there “for the workers”. Sure enough this seems to be the case.

    I commented fairly extensively on Andreas’ blog post above in case anyone is interested.

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