Is it inevitable that young people have to carry these costs of social change?

Introduction

Over the past half-century, the United Kingdom has witnessed radical change in a number of areas, not least in the ways in which the production of goods and services has been organised. As with all social change, some groups carry the cost more than others. In this case, young people have been among the hardest hit. Yet, the ways in which politicians and ruling elites in the United Kingdom have tackled the ensuing problems have not changed significantly. Fifty years ago, young people’s attitudes and behaviours were seen to be the cause of the problem. In the second decade of the twentieth century, this is still the case. Yet, this need not be so. In other societies, young people do not experience the same problems and anxieties that confront British youth.

Globalisation

All industrial societies have faced the same changes over the last five decades resulting from the globalisation of production. Following the Second World War, production was organised on a nation-centric basis. Goods such as automobiles and white goods had their components produced and assembled in the country in which they were sold. The United Kingdom had its own producers, while foreign producers based in the United Kingdom, such as Ford, also produced the components and assembled them in the United Kingdom. Similarly, services such as banking and retail were organised around national markets (Ashton 2017, forthcoming). These large organisations provided the basis of relatively stable communities in which young people tended to follow their parents into permanent full-time jobs.

Over the last five to six decades, a whole series of changes under the label of globalisation have transformed these relationships. First, during the late 1960s and 1970s, the capital and the whole of the production of low-value goods such as textiles, shoes and bicycles were relocated to the ‘developing’ countries in Asia, where labour costs were lower. As the authors illustrate in Chapter 2, for young people this spelt the end of thousands of permanent full-time jobs in routine semi-skilled and skilled production work. In the late 1980s and 1990s, the advent of the Internet and other developments in electronic technology created even more radical changes in the organisation of production. The control that employers were able to exercise over the production process through the use of this new information and computer technology enabled them to break down the process of production and locate the various components in different parts of the world, where the production costs per component item were lower; production was modularised (Berger 2006). This meant that some parts of the process remained in the older industrial countries (initially those requiring a high level of intellectual input), but other parts could be located elsewhere. Moreover, because employers had also learnt how to speed up the process of learning work-based skills, they could rapidly relocate the various parts of the process to other countries. These changes were facilitated by the progressive reduction of trade barriers between nations through the actions of transnational companies and organisations such as the World Trade Organisation. Trade between nations expanded rapidly − for example, between 1990 and 2010 global trade grew roughly twice as a fast as global GDP (Manyika et al. 2012: 73), a process that illustrated the growing interdependence of nations in the global economy. As this process affected more and more of the national economy, employment for both young people and adults became more insecure. By the twenty-first century, much of manufacturing and large areas of service production were organised on a global basis.

In the older industrial countries, these changes were also associated with a shift in the balance of power between the classes. Work by the Organisation for Economic Cooperation and Development (OECD) (2012) has shown that the proportion of national income going to labour has been falling since the 1990s in most OECD countries. In the early 1990s, labour received an average of 66 per cent of the national income, but by the early 2000s this had fallen to 62 per cent. Within the United Kingdom, as in some other societies, this fall in the share of labour in the national income is not uniform across all workers. The income of top earners has increased dramatically during this period (Atkinson et al. 2011), while the position of those at the bottom end of the distribution has been worsening (Atkinson 2015). For youths who are disproportionately found in low-wage occupations, the situation is even worse.

Other changes were also taking place in the organisation of production, namely the application of mass production techniques to the growing service sector and the increasing use of computer and Internet technologies to rationalise and routinise work in the retail, restaurant, hotel, travel and financial sectors. At the same time as economic growth and the application of digital technologies were increasing the proportion of knowledge-intensive jobs in the areas of management and technical and professional work, the new technologies were routinising many jobs in these areas and reducing skill levels as routine transactions were performed through the use of algorithms (Brown et al. 2011). Meanwhile, in the retail and restaurant trade, the use of mass production techniques together with the growth of personal service and care sectors were increasing the number of low-skilled jobs.

National level

National governments responded differently to these pressures for change. How they responded depended on a number of factors, such as the values of the political elite and the existing institutional provision for education, welfare and workplace training. In the United Kingdom, the combination of the commitment to neo-liberal policies and the deregulation of the market for capital and labour led to the spread of flexible labour policies throughout the labour market and subsequent insecurity in employment. In this context, the responsibility for securing employment was transferred from the state to the individual. Young people were portrayed as solely responsible for investing in their education and training and securing their jobs. Consequently, any failure to achieve qualifications or a job was seen to result from personal deficiencies. This was not the case in other societies.

In Germany and Denmark, the political elites continued to support collaboration between the state, employers and unions in the implementation of employment policy and, to a lesser extent, welfare policy. These policies did not eradicate the trend towards greater flexibility in the use of labour or the widening of the gap between the classes, but as we shall see, they did contain it in different ways. For young people in these countries, it meant that while they came to be seen as partly responsible for investing in their education and training, the state continued to accept responsibility for ensuring that the worst effects of insecurity were mitigated during their transition into work.

United Kingdom

In the United Kingdom, the powers of global capital to limit the powers of the state with regard to the movement of capital were extended by the political actions of the Conservative government through the privatisation of the public service industries and by the deregulation of the financial services. This led to a reduction of the influence of national values and pressures on companies which, ‘freed’ from these constraints, responded more to the financial pressures from global markets (Gomez and Korine 2008). There were a number of consequences of this enhanced leverage. One was that it contributed towards a more radical shift in the balance of power between employers and employees in the labour market than was observed in many other countries. As a result, the salaries of senior managers increased rapidly relative to that of their employees (Atkinson et al. 2011). The other was that many public companies, and the jobs they created in the labour market, became increasingly subject to short-term fluctuations in the financial markets. The jobs therefore offered less security for employees, not just the operatives but also middle managers and professional workers, generating more insecurity throughout the labour market (Clark and Heath 2014). At the same time, the powers of the unions were severely limited through legislation that reduced their ability to resist the accompanying changes in terms of conditions of employment. This also hindered their attempts to protect wages against the downward pressures created by companies using labour arbitrage to lower wage costs and through the use of immigrant labour that was used to create downward pressure on the wages of the lower skilled.

As Chapter 5 illustrates, young people were not passive recipients of these changes; many responded to these new pressures by extending their education. Encouraged by the raising of the school leaving age and persuasion from the government and media to invest in their own human capital, an ever-increasing proportion of them stayed on at school and later sought entry to higher education. As measured by educational achievement, the skill levels of the youth labour force were constantly increasing (Green 2006), although there remained a stubborn group of low achievers, while educational levels as measured by international comparisons remained low. For those who entered jobs at the top of the labour market, with private education and Oxbridge or Russell Group university degrees, the prospects were good and their income steadily increased. For those who entered in the middle and at the bottom of the labour market, the focus of this book, the situation was different. During the recessions of the late 1970s and the Great Recession of 2008, less than half the young people entered permanent, secure, full-time work. For the majority, the experience was one of unemployment, government schemes and temporary and part-time work. Moreover, these figures were an average; in some of the more depressed areas of the country in the 1980s, entry into full-time permanent work was available to only just over one in five. In the face of these new conditions of insecurity and casualised jobs, many remained satisfied with their lives and levels of optimism were high. Yet, we have also to set this against the fact that those occupying the most disadvantaged positions display the lowest satisfaction with life, tend to be the least optimistic and have the poorest mental health (see Chapter 5). This was the cost of exposing young people to the operation of unfettered market forces.

Given these radical changes in the structure of the labour market, one would expect to have witnessed significant changes in social policy, but this was not the case in the United Kingdom. Following the Second World War, the ‘problem’ of youth employment was tackled by attempts to improve the apprenticeship system and, later, by making training programmes and job creation schemes available for young people. The assumption was that the state had a responsibility to help youth transition to work, so the problem for policy makers was to ensure adequate training and, if necessary, to create jobs. This approach still coloured the approach of the Labour Party, as when the recession came in the 1970s, the initial response of the Labour government was to provide jobs through a Job Creation Programme and, later, the Youth Opportunities Programme. Then, with the advent of the Conservative administration, the policy approach took a radical shift. The political elite and the business groups associated with them propounded an alternative belief that the working of the economy should be left to the operation of market forces, a belief derived from neo-classical economics in the power of the market. Government action should therefore refrain from interfering with the workings of the market. It followed that individuals were responsible for finding jobs and acquiring the skills that the market required. Policy was therefore to be limited to helping ­individuals to acquire the skills or human capital required by the market. The problem of unemployment came to be seen as one caused by the failure of young people to equip themselves adequately for the labour market − they had to be helped to help themselves. This led to a two-pronged approach to the youth problem.

First, it meant that the state should only provide training programmes for youth to rectify the deficiencies in their personal qualities. Second, because obtaining work was the responsibility of the young people themselves, then a series of policy measures were instigated to withdraw any form of financial support for young people to ensure that they took any jobs that were available, referred to by the authors as the ‘punitive turn’ of social policy. The ensuing training programmes − the Youth Opportunities Programme, the Youth Training Scheme, Modern Apprenticeship Programme and Modern Apprenticeships − were characterised by a series of common features. They were designed by civil servants without consulting employers or worker representatives, and they were centrally controlled with the sole aim of ensuring that young people acquired the skills necessary for work. They usually consisted of workplace experience, often with little or no formal training, and were often delivered through intermediaries, such as private training agencies. Trainees were provided with an income, so their services were free or heavily subsidised for the employer. They were then ‘sold’ to employers, in that the state also provided a financial incentive for the employer to take on the young person. At the end of the scheme, there was no guarantee of employment. In reality, these were usually workplaces at the lower end of the market, which had very short learning times and offered little more than work experience of very variable quality, as is documented in Chapters 4 and 5.

The second prong was to change the welfare system. To ensure participation in these schemes, the government gradually withdrew financial support for those who would not enter them. Starting in 1982, the government reduced welfare benefits which were later withdrawn altogether, creating a new social category of young people not in education or training (NEETs), for whom the state had no record.

What we have witnessed in the United Kingdom is a policy of blaming the victim − one that had its origins in the social and economic conditions of the 1970s, but one that has continued under the very different conditions of a globalised economy, and that, as this volume documents, entails serious costs for the young people at the bottom of the labour market. What have we learnt from other societies is that the policy response of the UK political elite is not the only possible response; in other countries, political elites have different values and beliefs and have created different institutional arrangements which have constrained the forces of globalisation and thereby mitigated the consequences for young people.

Germany

In Germany, the impact of these global forces was modified by the country’s continued adherence to the ‘social partnership’ approach, one characterised by labour market issues being determined through negotiations between strong employers’ associations, trade unions and the state. The German political elite did not ‘buy in’ to the neo-classical free market ideology to the same extent as the United Kingdom and did not lead such an assault on trade unions, and they maintained the institutional arrangements that functioned to shelter young people from the worst effects of the market. As a result, the forces of globalisation were present, but their impact was mediated by the German unions’ ability to safeguard the security of jobs, especially in the manufacturing sector. In the service sector where the unions were weaker this was less the case, and there, flexible employment policies were more widespread and employment more insecure (Hassel 2014).

Traditionally, Germany had an extensive apprenticeship system, shaped by the employers and unions which delivered a combination of high-level college- and work-based learning, governed by a national curriculum with learning in the workplace supervised by trained meisters. This delivered highly regarded training to three-quarters of the school leavers (Thelen 2014). In the face of change, national agreements between employers and unions gave way to plant-level agreements, while in the manufacturing sector the core workforce accepted lower pay and some flexibility in return for greater security (Hassel 2014). In this context, the basic structure of the apprenticeship remained. However, as the manufacturing sector shrunk and the service sector grew, the apprenticeships became increasingly differentiated between the high-end apprenticeships that ensured access to well-paid, high-skilled jobs in manufacturing and the professions and the apprenticeships leading to the increasing number of low-paid, low-skilled jobs in the service sector, where unions were traditionally weaker. Here, the pay was only slightly higher than that for the unskilled, providing little incentive for school leavers to enter them.

In the traditional apprenticeships system, there had always been a small group (up to 10 per cent) who were unsuccessful in obtaining an apprenticeship or who dropped out. As this group grew in size with the growth of the service sector, the government responded by introducing a state-financed ‘transition system’ to provide a patchwork of different opportunities for young people waiting to enter a ‘real’ apprenticeship. These places did not lead to vocational certification and were filled by those who only had the lowest school-leaving certificate or who had failed to secure any qualification, together with those from ‘migration backgrounds’. By the mid-2000s, there were nearly as many in the transition system as in the ‘real system’ (Thelen and Busemeyer 2012; Thelen 2014). Together, the apprenticeship system and transition system provided a shelter for those leaving school in the recession. In addition, the government also reduced the employee and employer unemployment insurance contributions, subsidised short-time working and increased staffing in the public employment service and provided funding for training. The result was that during the Great Recession, when youth unemployment soared elsewhere, in Germany the youth unemployment rate actually fell, from 13.5 per cent in 2005−7 to 10.4 per cent in 2008 and 11.0 per cent in 2009 (Bell and Blanchflower 2011: 246).

Denmark

In Denmark, the ‘social partnership’ took a different form. There, employers, unions and local authorities worked together to regulate both work conditions and pay, but their collaboration also extended to the formation and implementation of labour market policy, through tripartite bodies at both national and regional levels. The result has been the creation of a system of ‘flexicurity’ that provides employers with the flexibility in hiring and firing but a strong system of social security and active labour market policies that created security for employees. This security took the form of financial support and training opportunities and served to mitigate the adverse consequences of unemployment. It created a more comprehensive system than that found in Germany, encompassing both the manufacturing and service sectors; for example, during the Great Recession when 18 per cent of households throughout Europe confronted real economic hardship, the figure in Denmark was only 8 per cent (Madsen 2015). The same system also contained the impact of the forces of globalisation on the patterns of inequality with the Danish labour market that is characterised by low levels of segmentation, enabling workers to move between jobs of different skill levels. In addition, cooperation between employers and unions, together with high levels of trust between them, led to the creation of jobs of higher quality in terms of employee participation in decision-making and skill development (Gallie 2011).

For young people, this collaboration between the social partners created a comprehensive dual training system, combining work experience and college-based education, together with a system of regulated traineeships. In addition, the political elite have accepted that with the decline in the use of unskilled labour there is a need for young people to upskill, and this shapes their response to supporting the transition. Thus, the use of an active labour market policy has produced a de facto youth guarantee for unemployed young people. After a short spell of unemployment, they have to take part in government programmes; otherwise they lose financial support. If they do not already have a vocational education, they will be directed towards one (Madsen 2015). Thus, while young people in Denmark experienced relatively low unemployment rates during the global recession, similar to those in Germany (Bell and Blanchflower 2011: 246), the young people employed in the service sector experienced less insecurity and higher-quality training.

Conclusion

Neither the German or Danish systems are perfect. In Germany, high levels of insecurity and low pay are found in the service sector, where young people experience lower-quality training. In Denmark, migrants tend to be excluded from the system, but there are low levels of NEETs. Each ‘system’ has its own intended and unintended consequences for young people. However, they illustrate that the continuity of high levels of marginality that have characterised the fate of young people documented in this book is not an inevitable consequence of the workings of the market. Rather, it is the consequence of a political reliance on the unfettered use of market forces to organise the labour market and a fossilised ideology that perceives the costs of such a system in terms of the constant movement between low-skilled, part-time, temporary jobs, low-quality government programmes and spells of unemployment as the responsibility of the young people condemned to enter the lower levels of the labour market. This is perpetuated by UK government policy that continues to re-cycle old ideas about how government programmes are organised, re-invent the wheel and re-brand old approaches. To address this problem, we need to unlock policy thinking from the constraints imposed upon by the neo-classical paradigm, which has long outlived its usefulness in the current context, and develop policies, based on broader humanitarian values, that are more appropriate for the next phase of economic and social development.

David N. Ashton
University of Leicester