Cooperative scheming

The Youth Labour Market in Britain
May 23, 1997

The recent Queen's Speech put Welfare to Work at the heart of the Government's first legislative pro-gramme. These welcome proposals will help to reverse the decline in active labour measures over the last decade.

B.M. Deakin's book, The Youth Labour Market in Britain: The Role of Intervention, is a timely analysis of the efforts of successive British governments to promote the education, training and employment of young people.

Using human capital theory and G. S. Becker's more recent economic theory of training, Deakin argues that in free-market conditions little training of young people takes place because the risks to the employer and the trainee are too high. Employers face the loss of their investment in basic training through youth labour being "poached" by other firms. Trainees risk subsequent unemployment or being trained for the wrong occupation.

Deakin concludes that this situation demands intervention by government to invest in training by subsidising the trainee and the training employer. The alternative no-policy or "voluntarist" approach would lead to unacceptable levels of youth unemployment and social costs.

The bulk of Deakin's work is a sprint through the factors which affect the supply of young people to the labour market. He shows that government intervention would be more successful if it considered demographic factors, such as the baby boom in the 1960s.

His study of the qualitative aspects of supply through a history of vocational education and training is less helpful. A dizzying treatment of 400 years of history left me reeling and did little to enhance the central thesis of his work. His investigation into government intervention in the 1970s and 1980s is, however, riveting: it particularly captured my interest because during this episode I had responsibility for the Trades Union Congress's education and training policy and our links with the Manpower Services Commission (MSC).

Deakin considers the effectiveness of large-scale public programmes the MSC ran in the 1980s such as the Young Workers Scheme (YWS) and the Youth Training Scheme (YTS). He deduces their actual training and employment effects by considering estimates of dead-weight and substitution and argues that YTS did well in times of recession, but less well when labour demand picked up.

Deakin's figures may not be startlingly new, but they make a strong case for policy makers to learn from the myriad of schemes which have been in operation over the last three decades.

They show the need to improve the use of local labour market intelligence so that youth training responds to the long-term skill and labour requirements of employers, and they point to the value of targeting groups of young people who could benefit most from government programmes.

An important chapter is devoted to trade union reaction to intervention. Drawing from the debates at the annual Trades Union Congress, the author describes how the TUC adopted a strategy of cooperation with the MSC on its youth labour market policy, combined with pressure for improvements. I recognised the picture Deakin painted of TUC policy in this era. He writes of a struggle between some private-sector unions, on the one hand, who saw youth training as an opportunity and advised the TUC to work with the MSC to enhance the schemes, and some public-sector unions, on the other, where there were pressures to regard the recruitment of young people into training and jobs as a threat to the job security of their members.

In fact, this is an oversimplification. There were private-sector unions who worried about job substitution and public-sector unions who were active supporters of the policy. Generally, the trade unions were a positive and constructive force, and in spite of inevitable tension, the TUC managed to work through the MSC to make some significant improvements to the terms of YTS, such as extending the length of training and increasing the value of the trainee allowance. It was encouraging to see many of these gains built into Modern Apprenticeships, the flagship programme for young people under the last government.

The days of the MSC and formal tripartism are long past, but collaboration over training has not been lost. The union movement matched the devolution of the previous government's training arrangements with its own structures and has had some influence over the quality of public programmes.

Union members sit on the boards of TECs. Three-quarters of all TECs run schemes with the TUC which promote training to trade unions, and a TUC-TEC National Council Accord, announced last year, signals a new momentum for partnership on training between TECs, unions and employers. This book demonstrates that partnerships, planning and flexibility are central to the success of government intervention.

John Monks is general secretary, Trades Union Congress.

The Youth Labour Market in Britain: The Role of Intervention

Author - B. M. Deakin
ISBN - 0 521 55328 8
Publisher - Cambridge University Press
Price - £35.00
Pages - 223

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