The future of employment

Government recently launched a National Employment Policy - at a glance, the new policy appears committed to a number of important reforms which should result in an overall improvement in quality of life, particularly for those in the lower income bracket.
In practice, many of the proposals are an attempt to fine-tune existing social benefits. Reforms include in-work benefits, through which low-income earners retain social benefits for three years; full state payment of maternity benefits, coupled with a small increase in the national insurance contribution by employers; and increased expenditure on training, and greater inclusivity of groups such as persons with disability.
With such specific initiatives like free child care and free breakfasts in schools, the national employment policy seems very clearly focused on enticing more women to the labour market. At other levels it represents continuity of the previous government’s policy of encouraging the elderly to continue working without losing pension rights.
One cannot therefore fault the document on the level of its social commitment. But while much of what is proposed has merit, the policy itself remains vague on several of the details.
Perhaps the most contentious measure is the proposal for the state to subsume the full cost of maternity leave, but increase the national insurance paid by employers. Opposition leader Simon Busuttil has already declared that he is opposed to an increase in NI contributions to finance maternity leave; but while this may resonate with hard-pressed businesses, it also displays a lack of foresight in addressing the real problems affecting low levels of employment among women.
By paying for maternity leave in full, government will remove one of the main obstacles that results in female job applicants being discriminated against at hiring stage. A small increase to NI may be a small price to pay to eliminate the biggest hurdle for female employment, especially if it is offset against the fact that all the cost of maternity leave will be paid by government. But as yet we do not know the percentage of the proposed NI increase, which still has to be quantified.
It is not the only measure that remains vague and ill-defined. The proposed minimum wage top-up is welcome news, in the light of a recent study by Caritas which exposed the plight of minimum wage earners. But this raises a number of questions. Will the measure only apply to full-timers (who number around 2,000), or also to part-timers earning less than a minimum wage (numbering over 9,000)? Will the top-up be a one off, or will it become part of our welfare safety net? If so, will it be calculated in determining how much pension one receives? In this case, the government could be trying to take upon itself a social need without imposing any extra burden on employers: something which could harm competitiveness.
Moreover, the message conveyed by this measure is ambiguous. It could be interpreted as government encouraging employers to keep offering very low wages, with the state stepping in to make up the difference. If this becomes a permanent arrangement, it may even risk undermining public finances while encouraging precarious employment: a phenomenon the present government has vowed to eradicate.
The same policy also intends to curb abuse of the welfare system. In itself this is a commendable goal; but while clamping down on unemployment benefit fraud is necessary, one should also be wary of generalisations which create the impression that all unemployed people are parasites. One cannot ignore the complicated dynamics of life which include health issues, different levels of mental illness, and personal misfortune.
Government also has to face the question: should the state make the provision of a minimal basic income conditional on accepting employment? While one is tempted to answer in the affirmative to target those who continue receiving benefits while working in black economy, there is also the risk of leaving a small category of people deprived of any income at all, thus forcing them into destitution, or even crime.
Elsewhere, the policy appears to have overlooked important strategic niches in the labour market. Contrasting with the emphasis on greater female participation, not enough importance has been given to the integration of immigrant workers. This should be a very important aspect of any forward-looking policy which seeks to tap into the island’s full potential, and to coax such workers out of the black economy where they make no contribution to the country’s coffers.
Arguably the greatest challenge of all, however, is how to stimulate an economic environment where the number of productive jobs available increases to cater for the anticipated greater participation of women and older people in the labour market… and even then, to ensure decent conditions in the jobs created. With an otherwise favourable European Commission report predicting an increase in unemployment in the near future, one hopes this policy will be counterbalanced by an adequate job creation strategy.
All in all, then, there are a number of outstanding questions government should be addressing… even if the national employment policy is clearly moving in the right direction.