Today unemployment has dropped by 66,000: very welcome news indeed for the government, which has increasingly come under attack in recent months over its ‘omnishambles’ of budget U-turns and general handling of the economy. These latest figures mark the fourth consecutive month in which unemployment has fallen (taken over a three-month rolling average). And more people are in work – employment is up 181,000, the largest increase since July 2010. These early signs of improvements in the labour market are good news, although it is probably a little too early for talk of a sustained recovery in the jobs market.
Underneath these headline trends, the labour market figures reveal where the continuing challenges remain. Youth unemployment saw only minor decreases in this month’s figures, with the numbers of 18-24-year-olds without a job remaining about the same. Total youth unemployment is over a million now, and 16-24-year-olds constitute around two-fifths of the total number of unemployed people in the UK. Long-term unemployment also remains relatively high, with 885,000 people out of work for more than a year. The future employability of this group is of particular concern, given their sustained absence from the workforce.
The coalition must continue to seek out and target vulnerable groups. Particularly at risk are those without a degree, including many who are being failed by inadequate provision for high-quality vocational training. Many of the 270,000 young people in the UK who have been out of work for more than a year are likely to find that the scarring effect of long-term joblessness makes it more difficult to find jobs as the economy recovers, exacerbating the problem of youth unemployment.
The government has already targeted certain unemployment ‘hotspots’ in the north by providing early access to wage subsidies to employers hiring unemployed young people. These are also available elsewhere in the UK through the youth contract for young people enrolled in the work programme. However, the scheme offers a total of 160,000 wage subsidies, compared to 270,000 long-term unemployed young people. The fact that youth unemployment is no longer rising suggests that the youth contract is starting to have an impact, so now is the time to extend the opportunities it offers to all young people by guaranteeing a subsidised job to every unemployed young person.
To provide stronger support for the long-term unemployed the government could build on its targeted approach with the youth contract, extending a jobs guarantee to everyone who has been out of work for more than a year, with unemployment hotspots in northern England receiving priority.
Despite today’s welcome news on the labour market, the underlying challenges of youth and long-term unemployment are difficult to crack. Progress has been made, but the coalition must continue to dig deeper to ensure that labour market recovery is sustained and employment opportunities are available to all.
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Mavis McKenzie Cecil is a researcher at IPPR. She tweets at @Mavis_MC
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By subsidizing youth employment the government is admitting that the minimum wage is too low. The government should pass legislation so that employers pay a living wage. That is the only to reduce unemployment.