Youth unemployment came under the spotlight at this week’s Conservative Party Conference. Personnel Today spoke to leading employer groups and HR directors to get their reactions to a variety of policy announcements made.
Public sector pay
Shadow chancellor George Osborne said the Conservatives would introduce a public sector pay freeze in 2011 for all staff earning £18,000 or more. This would save £12bn over the life of the next Parliament. A day earlier, Labour announced a pay freeze for the most senior civil servants in 2010, and a 1% cap on pay rises for mid-level civil servants not covered by three-year pay deals.
How it was received: Duncan Brown, director of reward services at the Institute for Employment Studies, warned public sector employers could face retention woes when the economy picks up, as talented staff with frozen pay will look to move to the private sector. Gill Hibberd, president of the Public Sector People Managers Association, warned that the Tory pay freeze announcement could put enormous pressure on pay negotiations for 2010.
The Tories outlined their £600m ‘Get Britain Working’ scheme, which would replace the government’s Flexible New Deal programme. One key proposal, partly funded by cutting incapacity benefits, would give the young unemployed tailored help to find work after six months, rather than having to wait for a year, as they would under Labour.
How it was received: Richard Lambert, director-general of the CBI, said the struggling economy demanded fresh thinking, and welcomed prioritising support for the young. Government ministers dismissed the ideas as a “rehash” of Labour policies.
Personnel Today learned the government’s flagship skills brokerage service Train to Gain would not be scrapped by the Tories, despite the party admitting it would reallocate part of its £1bn budget towards welfare reform. Shadow skills secretary David Willetts said Train to Gain would be tailored towards reaching a new target of 300,000 apprenticeships for the young by 2012. Three new skills academies would also be created, supported by employers including Travelodge, Tesco and Microsoft.
How it was received: Business group CBI said ideas for increasing apprenticeships were much needed. Director-general Richard Lambert said: “We must confront rising youth unemployment before a generation becomes alienated from the workplace.” The Learning and Skills Network said the Train to Gain budget would be better spent on sending young people to college rather than subsidising employers to train their staff.
New businesses will pay no tax on the first 10 workers they hire during the first two years of a Conservative government. The move could generate 60,000 jobs by 2012. Employers currently pay tax at 12.8% on the salaries of their employees.
How it was received: Lee Hopley, head of economic policy at manufacturer’s organisation the EEF, said the news would send a strong signal on the importance of start-ups, but was keen to ensure all businesses benefited from help during the recession. John Cridland, CBI deputy director-general, said the proposal should help new firms take bolder steps in creating jobs.
The state pension age would rise to 66 in 2016, saving £13bn, meaning the default retirement age would rise with it.
How it was received: Experts told Personnel Today the default retirement age was likely to be raised or scrapped far earlier than Conservative plans to raise the state pension age to 66, meaning employers should already be reviewing their retirement policies. Owen Warnock, employment partner at Eversheds, said: “It is quite possible that, rather than raising the default retirement age, compulsory retirement will be banned altogether.”