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David Cameron Wants Young People in the UK to Choose Between Poverty and Debt

The prime minister's "earning or learning" plan will mean the choice between either poverty wages or student fees.

by Aaron Bastani
Sep 29 2014, 3:00pm

David Cameron photo via Flickr

As UK Prime Minister David Cameron did the pre-Conservative Party conference media rounds on Sunday, he tried as hard as he could to draw attention away from yet another Conservative member of Parliament defecting to UK Independence Party or the sex scandal involving one of his ministers and focus on a vote-winning policy announcement.

Given Cameron is one half of a Downing Street double-act which has employed a phone-hacking supremo to run a press operation and decided to cut the rate of income tax for millionaires during an unprecedented decline in real wages, it was easy to let one’s imagination run wild when speculating about what he was going to propose. Would it be tax breaks for fracking under elementary school playgrounds? Sending Royal Air Force bombers to help with the badger cull? No one knew.

In the end he outlined something altogether less bizarre but still predictably vindictive. Speaking on the Marr Show, the tired-looking Prime Minister outlined how, should the Conservative Party win the next general election, 18 to 21-year-olds would not be able to claim housing benefits or jobseeker’s allowance (JSA). Instead, they would be set to receive a “youth allowance”—set at the same level as JSA. In order to continue receiving this new allowance after six months looking for work, claimants would have to accept an apprenticeship or traineeship. Failing that they would have to accept mandatory “community work,” all of which sounds a lot like existing workfare programs—being made to work for your unemployment, and therefore basically doing work for massively less than even the minimum wage.

Cameron spoke of how such measures were part of his broader vision to “abolish youth unemployment” saying, We shouldn't be offering that choice [unemployment] to young people…we should be saying, ‘you should be earning or learning.'” 

At first glance you might think he has a point and that the ambition of abolishing youth unemployment is a commendable one. After all, getting more young people into work, education, or training has the benefit of not only reducing the number of people stewing at home with nothing to do, but also addressing Britain’s “skills gap”—the gap between how qualified people are, and how qualified they would ideally be for the needs of the economy. And while “abolishing unemployment” might sound like rhetorical hype, it is actually an achievable goal.

The problem is that Cameron would force people into the “choice” of earning or learning by taking away all other options, not by making either of those options any good.

Under the Conservatives, full employment would be achieved in much the same way that the coalition has got “record numbers of people” into work over the last several years—by making unemployed young people join Britain’s army of “working poor.” That army—which accounts for over half of those living in poverty in the UK and which grew by 500,000 in 2013—is one that subsists by earning the minimum wage. As I wrote last week, it is that same minimum wage which, if we’re going to call it what it is, should be known as “the poverty wage.” If you are over 21 and working full-time, it has been independently calculated as $1.50 an hour less than what is needed to meet your most basic requirements to live in the UK. If you are working full-time and live in London its $3.25 an hour less than what you need. 

But the story gets even worse if you are one of those under 21-year-olds that Cameron wants to force into work. For 18 to 20-year-olds, the minimum wage is $8.30 an hour. If you are under 18 its $6.16. That’s less than half than what is objectively viewed by experts as the bare minimum needed to live in Britain today. That means that many of the very poorest among Britain’s 6.7 million “working poor” will also be among the youngest. While young people have spent much of this government’s time in office rioting against tuition fees, their friends who didn’t go to college have in many cases been getting an even rawer deal.

So, the earning is not great, but what about the learning? Cameron intends to create three million more apprenticeships from the savings made by his proposed reforms, to suck up those young people no longer languishing on unemployment and turn them into skilled workers. But apprenticeships pay even less than the minimum wage for 16-year-olds: $4.44 an hour. While you might argue that apprentices have the bonus of also learning on the job, the truth is that it is impossible to do one without help from your family. Otherwise to choose an apprenticeship is, again, to choose to have the hours of a worker with the spending power of an unemployed person.

Apprentices earn at least some money, rather than just borrowing it, which is what students have to do. Looking back, the only reason I went to college was because jobs paid so little to school-leavers. The idea was that a degree was an investment in time that I’d get back later with the better prospects. What’s become clear in recent years however, is that the graduate dividend—the amount that graduates earn over the course of their careers compared to non-graduates—is not what it once was. The average amount graduates can expect to earn on leaving university fell by an incredible 11 percent between 2007 and 2012.

That’s part of a broader story which is seeing the pay of the young fall even quicker than the rest of the country. While the average pay-packet when inflation adjusted has fallen by six percent since the financial crisis, that figure is 12 percent for those in their 20s. What is more the costs of going to college are rising more sharply than just about anything else—well, apart from house prices—right at the same time as pay is falling. Added up this means that for many going to college and getting yourself in tens of thousands of dollars of debt is looking an ever less smart choice. While the alternatives don’t pay well, they don’t come with decades of debt repayments either.

Being a young adult is often thought of as a time of being care free and enjoying the springtime of one’s independence. Increasingly however, that vision is more appropriate for Britain’s millions of relatively affluent retirees who enjoy low-interest rates, still-increasing house prices, and a the afterglow from a welfare state that historically offered much, much more than it does now. But rather than being envious of the old, maybe we should learn from the society they grew up in.

Between the mid-1950s and mid-1960s—the peak of the post-war’s “long boom”—real wages in the United Kingdom doubled and the option of “earning” or learning was a real one with a growing higher education sector that catered for increasing numbers of working class students by offering grants. It’s that same period which offers the only example in British history of all but “abolishing” unemployment: the UK did not see it exceed 2.6 percent for the two and a half decades between 1945 and 1970. 

History offers something of a solution then—falling poverty through rising wages and state funding for those who choose learning. Instead, the government is demanding that young people choose to “earn or learn” while doing nothing to guarantee earnings that are worth turning up for and forcing those that want to learn into debt, which isn't much of a choice at all.

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