Take the long view on unemployment

economy, equality, jobs

Author(s):  Amna Silim
Published date:  15 Feb 2012
Source:  Public Finance

Today’s announcement of 8.4% unemployment confirms that the UK faces a major jobs crisis. The priority must be measures to tackle long-term worklessness.

Today’s unemployment figures released by the ONS show a rise in unemployment by 48,000 between October and December 2011, marking the 8th consecutive month of increased unemployment. Unemployment has now remained resolutely above the 2 million mark for the past 3 years.

Unemployment in the UK has now reached 2.67 million, levels not seen since 1995. And youth unemployment is now well above the million mark. From September to December 2011 the number of women out of work increased by 32,000 to 1.12 million, the number of men out of work increased by 16,000 for the same period. Unemployment rates continue to play out differently across the UK, with the North East facing the highest rate of unemployment at 11.2%, contrasting with the South West at 6.1 %, the South East at 6.3% and the East of England at 7.0%.

Public sector job cuts adversely affect women as they make up a large proportion of the public sector and the figures today continue to highlight the disproportionate impact public sector job cuts have had on female unemployment. Similarly, looking at unemployment rates across the UK, the north of England remains one of hardest hit areas, again owing to a large share of its employment resting in the public sector. Therefore these regions also bear the brunt of public sector job cuts.

Things are likely to get worse, as leading forecasts suggest that jobless figures will continue to rise throughout 2012. Responding to the bleak economic climate, private sector employers have expressed hesitation in hiring new employees, and plan to make further redundancies in 2012. The private sector was and is still expected to fill in the hole created by job cuts in the public sector; however roughly 5000 jobs were created from June-September 2011, barely compensating for the loss of 67000 public sector jobs over the same period. This reflects the private sector’s current limited ability to adequately absorb individuals from the public sector.

The scale of UK unemployment is heightened further when we look at long term unemployment. Figures released today reveal that in the three months to December 2011 860,000 people across the UK have been out of work for over a year, and 423,000 have been out of work for over two years. The government must prioritize tackling long term unemployment, as it has very serious knock-on implications for both individual job prospects and the national economy. Long term unemployment can cause a ‘scarring’ effect, reducing the likelihood that claimants will ever return to work and placing greater pressure on the welfare system.

That’s why the IPPR is calling on the government to guarantee a job to anyone who has been out of work for a year – paid at the minimum wage and with a requirement for them to take it up. This right should be accompanied with the responsibility to take the job on offer or risk foregoing benefits.

Faced with an unemployment rate of 8.4% and no signs of it letting up in the near future, the UK faces a major unemployment crisis. It will be the private sector that generates the jobs to get the jobless total falling. But the priority for government should be to stop cyclical unemployment becoming structural worklessness. This is essential not just for social justice – but also to support long term fiscal sustainability.

 
 

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Amna Silim, Research Fellow