News Analysis: Obama Jobs Plan and what it means for UK
Views on whether analogous measures to Barack Obama’s proposed $450bn (£283bn) ‘American Jobs Act’ could be implemented in the UK are mixed, Recruiter has found.
Views on whether analogous measures to Barack Obama’s proposed $450bn (£283bn) ‘American Jobs Act’ could be implemented in the UK are mixed, Recruiter has found.
The bill contains several key components, such as tax cuts by means of extending a cut in the Federal Insurance Contributions tax, collected from employers and workers to finance social security and healthcare for retirees. This cut aims to aid US businesses in expanding and job creation, as well as generating more money for US workers and their families.
Obama also wants to fund huge construction projects, schools and services. He has planned to pay for his jobs plan by eliminating $467bn in tax breaks for wealthier Americans and corporations.
Views on whether the bill will have a positive effect and if it would be appropriate for the UK to initiate similar measures are divided. Shehan Mohamed, economist at the Centre for Economics and Business Research (CEBR), commented that given the current economic situation in the UK and the fact that the government appears to be persisting with its deficit reduction plan, there is “much less appetite for fiscal stimulus,” here than in the US.
According to Mohamed, the British government ought to base economic recovery on the supply side. More should be done to re-stimulate recruitment and get more people back into work in the UK. He continued that “not enough is being done” by the government to “reform the labour market” and “engage in more quantitative easing,” although he concedes that the full effects of this remain, at this point, “unknown”.
However, Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD), told Recruiterthat similar measures in the UK would “make sense”. He added that he had a “broadly positive” view of the bill and stressed that while noting individual measures is important, it is “vital to view the package as a whole as a fiscal stimulus”.
These views mirror David Axelrod, president Obama’s chief strategist, who said that Republicans should not treat the package as an “a la carte menu”. He commented that a problem for the proposals in the US is the likelihood that “the economy will weaken anyway”.
There’s been an increase in productivity but employers have been “making the most of their existing staff” rather than recruiting. Dr Philpott said that it was a “worry” that “as our economy slows, employers will be under pressure to shed more workers”.
He also commented on the difference between the UK and US economies, conceding that the UK had “flatlined” compared the US, which until very recently had improved significantly.
In the US, Republican opposition to the Act has been fierce, as lawmakers deride the proposals as a “poor substitute” for policies needed to boost job growth in the country.
