The government’s new ‘job guarantee’ scheme could reduce the number of young people out of work and minimise the stigma of long-term unemployment that many people experienced in previous recessions, according to Professor Paul Gregg, from the University’s Centre for Market and Public Organisation.

Writing in the latest issue of Research in Public Policy, Professor Gregg, a former economic adviser to Gordon Brown and author of the Gregg Report, argues that the scheme, which will provide six months’ full-time activity for everyone aged 18-24 who has been unemployed for over a year, could reduce the damaging effects of previous recessions on young people facing long-term unemployment.

The work, to be paid at the minimum wage, will consist of transitional jobs in the private, public or voluntary sector. The benefits, Professor Gregg argues, are threefold. Firstly, if work needs to be done and people want to work, the government should organise it because useful work will be done and young people will have a wage and the satisfaction of making a contribution. Secondly, there is a wider social benefit because existing evidence suggests that compulsory full-time activity encourages some to find other solutions before being obliged to take a part-time minimum-wage job. Thirdly, those who have had work experience should find it easier to get work subsequently.  

In the article, Professor Gregg reviews previous job-creation programmes in the UK and abroad from the 1970s onwards and argues that the new scheme will succeed where others have failed because it focuses more on incentives for job providers as well as on the importance of continued job-hunting.

He argues that comparable programmes in the US that mix work experience and job-hunting show encouraging results but emphasises that the success of the new programme will require a strong commitment from the public sector, as well as incentives for job providers to move participants on into full-time work.

Speaking about the programme, Professor Gregg said: 

‘Job-guarantee participants must come to understand the crucial importance of looking for a sustained job. At the same time, it is vital for participants, future employers and the community as a whole that the job guarantee has clear social value.’