National service will damage the economy
Forcing every 18-year-old into unpaid national service will harm our already decimated hospitality, retail and leisure sectors, says Simon Neville
Prior to calling a general election, most commentators assumed the ensuing campaigns would be built around persuading voters which party is best placed to grow an anaemic economy.
The only Conservative attack with any cut-through was whether Labour’s numbers stacked up, and Labour has spent most of its time trying to craft a credible Chancellor-in-waiting in Rachel Reeves.
Yet less than a week into campaigning, and one of the Tory’s big policy idea is – national service for all 18-year-olds.
Putting aside all the ludicrous reasons why the £2.5bn a year scheme is doomed to fail, the most baffling aspect to me is how the Tories believe it will stimulate the economy.
The major reason for the policy, according to James Cleverly, is to help young people boost skills and social interaction.
Quite why that can’t be achieved in the prior 13 years in full-time education will have to be a column for another day.
But the party also says the plan for all 18-year-olds to either take up military service for 12 months or be forced to volunteer one weekend a month for a year, will stimulate economic activity.
Details on just how that can be achieved are sketchy and one might argue allowing 18-year-olds to join the armed forces as an employee with a salary, instead of for free, might be more appealing.
But, if anything, the biggest concern I have for the plans around national service is the potential to actually damage the economy.
Looking back just a few years, it was clear that a combination of Brexit and the Covid-19 pandemic put huge strain on businesses with large workforces.
Supermarkets were offering astronomical salaries to entice van and HGV drivers, the hospitality industry was crippled by hundreds of thousands of young EU workers returning to the continent during the pandemic and never returning.
This led to increased salaries in low-paid jobs, record high vacancy levels and higher prices for consumers.
While it’s true that the vast majority of the inflation spikes post-pandemic were caused by high energy prices, a decent chunk was also driven by higher wages and the wage price spiral Andrew Bailey clumsily tried to warn of when telling workers not to ask for pay rises.
Even today, one of the key reasons central banks across the globe have not started cutting interest rates is because core inflation – which excludes energy costs but includes salaries – remains stubbornly high.
With that in mind, imagine a situation where every 18-year-old is forced into national service. Overnight, the labour market becomes more expensive because the minimum wage is 33 per cent lower for 18-year-olds (£8.60 an hour) than it is for over 21s (£11.44 an hour).
Yes, most 18-year-olds will only have to forcibly volunteer one weekend a month, but, spread out among all of them, that’s a lot of shifts hotels, pubs, restaurants and retailers will have to fill.
The employment pool drops, costs increase and prices rise, leading to higher inflation. The high street is already decimated, with vacancies remaining high. And if the policy ever came to pass, we would be asking them to find even more workers or close down.
I fail to see how making life harder for the retail, leisure and hospitality sectors by forcing a key demographic of its workers to take up unpaid state-sanctioned roles in-lieu of paid employment, will help to stimulate the economy.
Coupled to that, for those teenagers who do have weekend jobs, how can we expect bosses to behave when told chunks of their workforce won’t be available one in every four weekends?
Maybe Mike Ashley and Tim Martin were ahead of their time with their widespread use of zero hours contracts because, surely, this national service plan will only see their usage increase, causing a new wave of insecure employment.
Then again, if the polls turn out to be right, the insecure employment of 18-year-olds will be replaced with ex-Tory MPs instead and the national service policy can go back into the vault of crackpot ideas – a place where it firmly belongs.
Simon Neville is media strategy and content director at SEC Newgate