This week’s employment figures are puzzling economists because of the unusual combination of big rises in employment, falling unemployment and flat growth. Employment is up 212,000 to reach 71.3 per cent, an impressive increase of 0.5 percentage points in just one quarter and the highest since early 2009.
Not only is unemployment down by 50,000 but there are also 138,000 fewer inactive people, suggesting that the falling unemployment rate is not the result of a rise in ‘discouraged workers’ opting out of the labour market. Unemployment now stands at 7.9 per cent, down from 8.3 per cent a year ago. The fall in unemployment this quarter is entirely accounted for by a drop in the number of young people out of work, which fell by 62,000.
These are impressive figures, although it’s clear there is still much to do. Behind the improving employment picture, long-term unemployment remains a serious problem, and with this month showing an increase of 13,000 people in long-term unemployment, the total figure is now creeping towards a million. Despite the fall in youth unemployment, there are still almost a million young people looking for work.
These are serious challenges that require urgent action. We need the youth contract extended into a fully fledged ‘jobs guarantee’ to ensure that no one is out of work for more than a year.
But in the longer term, politicians should recommit themselves to the goal of full employment, by putting jobs and growth at the forefront of policy. This would strengthen the public finances by raising payroll tax revenues and lowering benefit expenditure but it would also boost demand and open up new employment opportunities to those who find themselves at the back of the jobs queue.
A new report published today by IPPR examines the factors that lay behind the US jobs boom in the late 1990s and reveals the complex combination of reforms that may contribute to achieving full employment in the future.
For a few years until the 2000 dotcom crash, the US enjoyed an unemployment rate below 4.5 per cent, while productivity grew rapidly and inflation fell. Jobs growth was highest for black and Hispanic people and blue-collar workers, while the tight labour market produced strong real wage growth for low-to-middle-earners, breaking the long-run pattern of stagnant median wages for US workers that has dominated since the 1970s.
The policy lessons from this ‘golden’ period are not straightforward. Bill Clinton’s deficit reduction programme may have had a role in stimulating private sector growth, but this coincided with strong global demand, unlike in the current context. Monetary policy was also key, with the Federal Reserve keeping interest rates consistently low despite unemployment falling to very low levels, which encouraged strong private sector investment. The tech boom drove huge productivity gains, although proved ultimately unsustainable. Welfare reforms that put a time limit on benefits may also have contributed, alongside positive demographic shifts like a section of the ‘baby boomer’ group reaching labour market maturity.
None of these factors are easy for governments to recreate or sustain. But the late 1990s US jobs boom provides a lesson in the reforms and policies which can help push the UK closer to full employment. Pursuing full employment cannot be left to a single department or minister, but should lie at the heart of all government policy.
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Kayte Lawton is a senior research fellow at IPPR
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Of course it will be the next numbers which will matter because the part time jobs created by the Olympic games will be gone, also of course lots of retailers hoping to have a massive rise in foot steps through the doors employed a lot of part timers.
But to be honest I can see over the next few years a lot of the older workers struggling to find work, in my local area we are seeing younger people being employed and less and less of the over retirement groups, also less disabled people are being employed.
But if the next figures are lower then expected labour going to have to work harder to make out they know best.
Yeop. It seems pretty clear that there was economic conditions of the late 90’s/early 00’s created a quasi full employment effect. What’s interesting is inflation in this period. I’m only an armchair economist, so I couldn’t possibly speculate as to how low rates, low unemployment and solid growth resulted in low inflation and no overheating. Perhaps because the growth wasn’t dispersed evenly enough (i.e. concentrated in the top few income percentiles) to impact significantly enough upon demand?? Like I say, I don’t have the requisite expertise…
I think the current economic condition is less puzzling. Rampant underemployment and collective deleveraging from our personal indebtedness can explain the disconnect between growth and unemployment. Also corporate hoarding and lack of investment – but we’ve had a problem with that in the UK for far longer than the last couple of years….
In my view and experience, the Welfare to Work programme is not working – as it fails to address in policy the demands of employment engagement that skilled job seekers want.
While the work Empowerment is always the ‘boss’ work spoken by employment advisor’s and managers at these big DWP contractors, these same contractors fail to acknowledge and understand that job searches alone cannot be the only answer to gaining BIG attention from HR teams – a leading force at companies – even Socially Motivated organisations. The advise from personal advisor’s is to somehow get your CV before an business owner – now, this seems like ‘jumping hoops’ to me – and in the meantime, what are these £multi-million pound contractors doing to support the employment goals of skilled people? Are they building partnerships with community interest companies and private companies in order to reflect this demand of their clients?
With the Job centre’s now outdated and still remaining as a poor reflection of what a HUB should be, the demand for Innovative and Creative policies has to be the hand-up needed to resurrect employment and restrengthen our communities. However, how long will it take for our Ministers to touch-down – both feet firmly placed on the ground – enabling such a valid understanding of the obstacles and form the solutions we so desperately need to ignite a stimulus for Growth?
Are you saying that corporate client demands (needs?) shouldn’t be at the heart of action and that employment goals of skilled people should be focus of government energy?
Are these not cart-before-the horse arguments?
Should we perhaps (i) do everything we can to support job creators (ii) be careful not to spend resources on jobs that disappear quickly (ones we can’t afford) (iii) make sure HR people know about HR available (iv) be better at guiding people towards upcoming skill shortages (v) encouraging people to be more creative.
Like Alan Lockey, I am only an armchair economist but it seems to me that financial transactions within the UK, i.e. jobs>pay>spending>creation of demand, can help create jobs in areas where we want services but in the end we can only import resources that we can balance with exports – otherwise we don’t pay our way in the world. If we have too much internal stuff going on, and drawing in imports, we sink. So our efforts must be towards (i) satisfying corporate needs (ii) encouraging creative people (iii) helping free the unemployed from constraints that hold them back, etc.
John C,
Yes we, or the DWP contractors, should be doing all that is possible to support the job creators, but the point I am making is that currently these contractors are not building the partnerships with third-sector organisation, nor do they seem to be collaborating effectively with their main partner, Government, to ensure that government community project funding schemes that give opportunity to jobs, are not be communicated to the clientèle of the welfare to work contractors. Why is this?
I am in no doubt that the policy has not positively influenced these welfare to work contractors, and that skilled individuals who desperately seeking work are not getting the type of ’employment agency’ led support from the contractors that job seekers desperately seek. Therefore, the welfare to work programme fails to work as effectively as it should be given the desperate need for employment and a need for innovative & creative policies that inspire progress in the lives of job seekers.
The welfare to work programme just is not doing what is desperately needed to stimulate economic recovery through using employer engagement policies aimed at securing asset-worthy people for companies that are crying out for these people.
Please tell me why such a policy is not viable to meet these specific demands?
I see. Sorry I misunderstood.
So the contractors are not matching clients to opportunities. It seems incredible they do not do so.
If I were an employer desperate for people with specific skills and later found that those contractors had not brought them to me I would be thinking we need to do this another way.
Perhaps the employers need to take charge of the process to ensure it works for them, and those people with the skills.
Maybe government should only be a partner in that, and not controller. After all, they do get so much wrong.
Thank you for your insight on this.
Thanks for your response, John.
Yes, this is the reality amid the strong focus, ambition and determination to secure employment goals.
How frustrating when on acknowledges that government is the main partner of these contractors, and government has a strong focus on Community Development as part of its ‘big society’ campaign – not least the fact that government is also putting £millions into community development projects – but yet, these contractors such as Ingeus, Reed in Partnership… etc are telling me that they only have Tesco jobs available. Appalling!
I have a strong management background in the private sector, and have also worked in the third-sector and public sector and remain passionate about utilising my transferable skills in the third-sector with a key focus of driving forward progressive policies aimed at improving social mobility amid the social challenges people are facing. But yet, with all this unique balance of skills, ambition and determination to ‘get stuck in’ to this work, these ‘welfare to work’ contractors have never given me a call with any such employment opportunities. Extraordinary!
Yes, I am passionate about setting-up my own social Enterprise, as I also have experience of previously starting-up a business. But, I am also aware of the somewhat bureaucratic and many times long wait to acquire the amount of funding I will need for my project. So, understandably, I am seeking employment opportunities that reflect the passion, skills and experience, of my career goals.
However, with these ‘Welfare to Work’ practitioners adopting an Employment Agency type ethos and thus ‘doing business’ with potential employers to secure such opportunities for me, I fear getting burnt-out again and again as I continue to drive myself each and everyday – ‘reaching out’ in the hope that I gain a response from someone who seeks a “…proactive, adaptable and creative-thinking individual who seeks a challenging career opportunity in a more progressive and inventive environment… with the need for refreshing attitudes and innovative solutions to inspire progress in the lives of young people.”
I will continue to drive myself each and every day!