NCPA - National Center for Policy Analysis

Laborites Peek Into Welfare Reform

July 2, 1997

Even Britain's newly-empowered Labor Party knows something must be done about welfare there, but steps being proposed are far more timid than last year's U.S. reforms, observers say.

They question, in fact, whether any European country has the stomach to launch serious reforms.

  • Britain's Prime Minister Tony Blair is presenting a welfare-to-work proposal with a price tag of $5 billion.
  • "There is no staying-at-home-in-bed option," announced the Chancellor of the Exchequer in describing the plan -- which aims to halve benefits to welfare recipients who refuse to join in a job hunt.
  • Critics say one major flaw in the Laborites' five-year reform plan is that it's financed through a tax on privatized utilities -- a "tax on success."
  • Young Britons, among whom unemployment is at 10 percent -- compared to an overall jobless rate of 5.8 percent -- are the targets of the back-to-work drive.

Under Blair's plan, those less than 25 years old would have four options:

  • Take a six-month job with a private company -- which would be paid a subsidy of 60 pounds a week for each unemployed youth hired.
  • Do volunteer work.
  • Join an environmental task force.
  • Enroll in a full-time educational course.

A weekly subsidy of 75 pounds would be offered to employers who hired those over 25 who have been unemployed more than two years. Pilot programs are to begin next January in 15 areas, to be expanded nationwide in April.

One concern is that no new jobs would be created. Employers would simply hire subsidized workers rather than unsubsidized ones.

Source: Helene Cooper, "Britons on the Dole Must Work, Or Else," Wall Street Journal, July 2, 1997.

 

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