A Study Of Unemployment And Job Seekers Allowance Economics Essay

Unemployment is at its highest level since the economic crisis of 1929. Due to the economic crisis, many have lost their jobs and cannot find new ones. In the European Union (EU) the average unemployment rate is 9,5% of the labour force between 16 and 64 years old (EU Statistics 2011). In the UK, the rate is around 8% and in the Netherlands it is 4,4% of the labour force (EU statistics, 2011). Al these people are registered as jobseekers in their national database. More than 90% are legally in title of a jobseeker’s allowance (EU parliament, 2010).

During my exchange period, I came across many people looking for jobs that were complaining about the effect of the government cuts on their allowances. Most of them were young British citizens. The subject could be also read almost daily in the newspapers. Although there is unemployment in Holland, most jobseekers receiving an allowance (JSA), do not complain about it. Government cuts did not apply to it either.

The purpose of this essay is to compare the system of two different European countries; the UK and The Netherlands; regarding jobseeker’s allowance. From which conditions the jobseekers have to meet to how effective the system actually is. During the research, a jobseeker and questions were asked at a job centre.

Main Part

Common approach

Toward my research, I found out that both countries had many points in common. The main reason therefore is that both countries are members of the EU. In both countries, in order to qualify for a JSA you have to be between 18 and 64 and actively searching for work. Students or just graduated cannot apply for it. In both countries, men have to prove that they have been looking for work.

However, there is no common European law or policy that determine how European countries should deal with jobseeker’s allowance (EU commission 2010). Each country can determine the amount their citizens are allow too or the degree of control they will have on the jobseeker.

Dutch approach

In Holland, JSA includes benefit. The institution is called “uitkering”. It includes rent, money for groceries and money for personal use. While JSA is just for people out of jobs or looking for one in some countries, in The Netherlands it is meant for everyone who does not have a job but also for other group of people. Anyone who has no income can apply for a jobseeker allowance. That includes legalised immigrants, who have yet to integrate and stay home mothers. Every jobseeker has also the right to have an professional formation while receiving an allowance. That formation is paid by the government. The amount of JSA lies between €700 and €900 (£610 – £810), depending on how large your family is. Most Dutch are happy with their JSA (CBS, 2010 – Dutch Central Bureau of Statistic). From personal experience, I noticed that some Dutch people see it as a privilege and a right. There is not as much pressure on jobseeker as in other European countries. They are not supervised thoroughly to make sure they are actively searching for a job. In this crisis time the government is planning of decreasing the amount given to jobseekers. Surprisingly no or little objections has been made about it. A recent report (CBS, 2011) shows that the majority of the country (72%) thinks that due to a lack of strictness, many people are receiving JSA without being entitle to it.

In my direct environment, most people receiving JSA are over 30 and are going to school to obtain a diploma. There formation will take them at least 3 years maximum. They are no “normal” students. They have been working in the past and just lost their jobs. They need a diploma to find a new career. They find it normal the government is paying for their school and living expenses but are at the same time thankful. The jobcentre has to help you look for a job. They even arrange job interviews with companies. If you do not find a job, you will not be accountable for it, because it is the jobcentre’s job to help you find one. They also work with private job agencies. While receiving JSA, you will also be helped to pay your debts and get discount on the majority of your bills. This all fit in the Dutch way of thinking: “ The rich and the government should take care of the poor and the distressed.”(Hollands gewonten, 2011).

British approach

Jobseeker’s allowance (JSA) was established in the United Kingdom (UK) since the 20th century. The unemployment benefit system and the Poor Law were then initiated. JSA is only meant for jobseekers who has been working before. In the last year the number of JSA demand has rapidly increase due to the unemployment. Before being accepted, jobseekers need to proof that they lost their job and that it was not their fault. After you apply for JSA, you will have to present yourself every 2 weeks to a Job Centre. When you present yourself, you will have to bring with you evidences that you have been looking for a job via any means. You can also use a machine there to find one. While searching for a job, you are not allowed to go to school because it means that you won’t be available 40 hours a week. You will lose you allowance immediately. You are also not allowed to go on vacation. The average amount of a JSA is £50 a week and depends on how old you are. It gets higher when you get older. For my research, I went to a job centre and interviewed a jobseeker called Edmund. Edmund is 26 years old and had been working in a peanut butter fabric in Manchester for nearly 7 years. He has no diploma and no other qualifications. In order to find a job, Edmund wants to go to college and study IT. The study will take 3 years to complete. During an appointment at the job centre, he mentioned that he just signed in at Manchester College. That means that would not be able to look for a full time job. Edmund’s jobseeker allowance was stopped immediately. The jobcentre made it clear that he has to be available for at least 36 hours every week. Edmund was not able to get other help because he’s not studying at an university. For jobseekers a career change is almost impossible. It is blocked by the many polices jobcentres have.

Why this difference

The difference between The Netherlands and the UK is mainly economical. These 2 countries are very different. The United Kingdom, being a big country, has a larger population. Which means that it has bigger amount to spend on JSA’s of its citizens. That makes it necessary to make sure that only the one entitle to it get it. With a 32% marginal tax rate imposed on average income workers, the UK still qualifies as a relatively low-taxed nation (Businesspundit, 2010). The Netherlands at the other hands is a small country. Its taxes are one of the highest in Europe with a maximum of 52% maximum marginal tax (Global property guide, 2010). The population is just 1/4 of the UK’s (statistics.gov.uk, 2010). That means that the average JSA per person will be higher than in the UK. Economically, Holland has more to offer than the UK. Also under the Dutch employment law, Dutch workers as well protected. They have the right to follow a training in order to improve or change their career. Meanwhile they are entitled of their JSA. With this law protecting them, Dutch jobseekers have more than British jobseekers.

Conclusion

In this essay I described and commented on the way The Netherlands and The United Kingdom deal with jobseekers and JSA. I established how much influence the economy of a country can have on his policies. Although the EU tries to put all European countries on the same level, many countries still have different policies in many sectors. In this case, because of the difference in the policies, citizens of one country have more opportunities than the other country. I found it shocking to see how limited Edmund’s options were. He was willing to go back to school and make his life better. Unfortunately that was denied to him. His story makes me conclude that it may be better to be unemployed in a higher tax rated country in Europe than a lower taxed one. JSA’s comes from taxes paid by the working people and companies, so that support my conclusion. With the economic crisis, JSA’s are not the main priority of the British government. Cuts are being made to help the economy recover. Until the economy gets better, the situation of jobseekers in Britain is unlikely to be improved.