Begg Critical of Job Subsidies

David Begg of ICTU has responded to Sarah Carey’s article on job subsidies.  The essence of his reply is twofold.  First, he also thinks it’s a bad plan. He writes that

Carey is correct to point out that a “jobs subsidy scheme” of the nature she outlined would be disastrous. It would be a waste of vital taxpayers’ funds, it would do nothing to ease the jobs crisis and, of course, it would be wide open to corruption and abuse.

Second, the plan wasn’t his idea:

Unfortunately, where she went wrong was in attributing such an initiative to congress. The truth is that precisely this approach has been repeatedly proposed by employer and business groups. We have opposed such feckless initiatives from the outset.

Really? Perhaps I’ve got this wrong but my sense was that ICTU’s objection to the plan was that it wasn’t big enough in scale.  The plan certainly emerged from social partnership negotiations rather than independently from the government, so the unions were certainly in the room when the plan was hatched.  And here’s how the Irish Times reported their reaction last week:

THE IRISH Congress of Trade Unions (Ictu) has said it is disappointed with aspects of the Government’s new proposals for economic recovery, including the scale of its new subsidy scheme to support jobs that are at risk.

ICTU’s own webpage states their objections as follows:

Executive Council members had expressed unhappiness at the level of initial resources being made available – €250m with agreement on funds of €1 bn being available should the meaures prove effective and worthwhile – and at the exclusion of large sectors of the economy from, particularly construction and services.

These reports certainly seem to point to the scale of the program, rather than its nature, as being ICTU’s objection.

Still, rather than quibble with what appear to be inconsistencies in the trade union stance on this (no need to impose the tyranny of consistency) let’s focus on the positive side which is that there now seems to widespread agreement on the economics of the €250 million job subsidy proposal—it’s a bad plan.

Having apparently passed on job subsidies, Begg’s article points to a set of other proposals in ICTU’s Job Creation and Protection Plan, so these proposals are worth looking at.  While the plan mentions a figure of €1 billion as its price tag, it doesn’t contain any itemization of costs so it’s hard to know which of the measures are considered more important than others.  Many of the measures mentioned in the plan (such “Guarding Against Excessive Flexibility Requirements”) don’t seem to relate to reducing unemployment.  Two that do, and that are mentioned in Begg’s article today, are job rotation and a social employment programme to meet gaps in social infrastructuree.

The job rotation proposal envisages workers going off to get training (perhaps a couple of days a week) while an unemployed person fills in for them.  I haven’t seen research on this type of scheme but it seems likely that it could only work successfully in a very limited range of sectors.  If you employ someone to dig holes, then you probably don’t care too much about having an unemployed person come in an take their place a couple of days a week.  But most jobs are not like that. Instead they require specific skills built up over years and ongoing relationships and exchanges of information with other colleagues.  It’s hard to see many employers want to sign up for this unless the State overpays for the placements.

The social employment programme sounds an awful lot like the FAS Community Employment Scheme.  Unfortunately, empirical studies have generally shown that these are the least effective schemes in terms of boosting the long-term employment prospects of participants. (See for instance, Phillip O’Connell, “Are They Working? Market Orientation and the Effectiveness of Labour-Market Programmes in Ireland”, European Sociological Review, 2002.)

I know I’m going to get the usual criticisms here that I’m being negative but it’s important that this debate is had.  The ICTU measures are well-intentioned but they need to be subjected to critical analysis.

11 thoughts on “Begg Critical of Job Subsidies”

  1. That was an excellent riposte. Sarah Carey can be happy that she got a lot of her piece right. The Unions can be proud that they are in a position to reject the criticism levelled at them.

    David Begg’s call for the jobs crisis to be treated with the same urgency as the banking crisis and for Government to put every ounce of effort into it is compelling. We all know that the Government has no money at the moment but the Government does not know how international circumstances will change over the next couple of years or what kind of policy approaches may be endorsed by the EU, international leaders and financial markets.

    The Government needs to be ready to roll with whatever schemes are possible or nearly possible. Mary Coughlan is missing a big opportunity. When we were threatened with foot & mouth there were meetings every morning. There should be similar meetings in the Dept of Enterprise conference calling with the Minister for Finance and Taoiseach every day.

    It is a political imperative for the Govt to be seen to give people’s jobs as much priority as the banks notwithstanding how crucial the banks are. It has not gone unnoticed that there have been no compulsory redundancies in the banks notwithstanding that they are doing a much lower volume of work.

  2. The job support scheme was seemingly born of the idea that being seen to make some response to the jobs crisis is much more important than any positive impact coming out of it.

    Similarly the fact Begg is being seen to respond to Carey’s criticism is much more important than his article actually making any sense.

  3. I posted on the ICTU document at some stage. Greater flexibility to ensure that viable companies dont go bankrupt because of binding union agreements is one feature that should get more attention. Job sharing is also strongly flagged. The assertion that “any curtailment” of existing infrastructure projects will be bad for workers is very misguided as highlighted very well by Edgar Morgenroth’s paper. Also, the heavy emphasis on union provided training by the Congress Centre’s Network merits more scrutiny and the case doesnt get made well in the paper.

  4. Michael Taft makes another excellent contribution to the debate on stimulus, unemployment strategy and labour market policy:

    http://notesonthefront.typepad.com/politicaleconomy/2009/07/the-irish-times-can-claim-it-is-stimulating-debate-on-important-issues-after-all-didnt-one-of-their-columnists-provoke.html

    As he did on Prime Time last night:

    http://www.rte.ie/player/#v=1051433

    As for Sarah Carey, its amazing that a gossip columnist can attract so much economic attention from serious thinkers.

  5. I found out about the other Irish economic blogsite from the Carey article. I am gobsmacked. Two groups of economic ideologues tipping their keyboards as this state sinks into a mountainous midden of debt – get real for God’s sake.

    We need a meaningful intellectual engagement with the matter of the economic downturn – which I believe will be permanent. Bit too long to explain in a post. If Ye of the Two Blogs cannot analyze the current economic predicament for what it really, and come to reasonable conclusions about it, then I suggest ye quit. Ye are just a bloody nuisance.

    Debt. The real problem is the very high levels of debt (national, corporate and personal)- which are incrementing logarithmically – and our income streams to pay this debt are declining. We must cram-down the debt fast. Very unpleasant, but it has to be done.

    Get in touch with the guys in charge of that other blogsite, combine your resources, and gives us, the citizens of this state, genuine intellectual discourse.

    Brian P

  6. Sorry Brian, but who is being an economic ideologue? Just because there are two different websites with people with different approaches doens’t mean we’re all being ideological.

    And please please please, stop with with logarithmic thing. There’s a reason nobody’s agreeing with you on this.

  7. Brian

    There are more than two Irish economics websites and blogs. I have collected many of them here:

    http://www.irish-lawyer.com/economics-rss-feeds/

    http://www.irish-lawyer.com/banking-rescue-rss-feeds/

    but I need to include a few more. (Unfortunately, in the above, they are mixed in with international sites, but sometimes the latter shine a useful light on the Irish issues too)

    Economics is not like physics: there is no one “correct” answer. (Aside to physicists: yes, *I* know that this is a caricature, but *you* know that I am not totally wrong). However, it would be a much better world if non-economists paid more attention to the matters on which economists agree than to those on which they disagree.

  8. @Stringer Bell, what’s amazing is not that a gossip columnist can attract so much attention, it is that she is one of the few talking about the issues and suggesting solutions. Still, at least we gave that nice Michael Jackson a good sendoff with a whole day devoted to him…

  9. @yoganmahew, Sarah Carey does not and has never provided any suggested solutions to our current situation. She looks at the personalities of the day, scans their opnions and mushes it together into a juvenile narrative. She, and many other journalists embody everything that is wrong with Irish media. They personalise and sensationalise rather analyse and investigate. This is why so many people are turning to the Blogosphere for their news (and where, it would seem, established journalists go for theirs also- free riding). Social welfare supports for those losing jobs, and policies aimed at tackling unemployment are too serious a matter for bland, unconsidered generalisations. Most serious thinkers should and do implicitly acknowledge this.

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