Long term labour subsidies. Letter to FT (1991) | Brussels Blog

Long term labour subsidies. Letter to FT (1991)

posted by on 3rd Aug 2016

See also A macroprudential proposal for employment

Give the unemployed long-term subsidies


Richard Layard and John Philpott repeat the conventional wisdom that “unemployment is the price we pay a for controlling inflation” (“A 12-month turnaround for the unemployed”, September 1.1).

More accurately, it is the price the poor (now renamed the underclasses) pay.

Layard and Philpott’s answer relies heavily on “high-quality training leading to recognised qualifications”.

Before we all jump on the training bandwagon, perhaps we should ask to what extent training independent of the workplace actually increases an individual’s ability to do a job. I remain highly sceptical of the trainers’ claims.

Their suggestion for a subsidy to employers for taking on an unemployed person has some merit: it does oil the friction in the labour market. But some employers are already using similar schemes as long-term labour subsidies by sacking employees after the subsidised period has ceased and taking ‘on new employees and new subsidies,

Why not confront the problem head on? At a given time, there will be people who cannot legally earn enough to have a civilised life. Instead of giving them life skills classes or paying them not to work, subsidise them into a job and, if subsidies need to be long-term, let them be long-term.

Geoff Beacon, 13th September 1991

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