Transcript Jane Kennedy, Manchester 2nd February

“Active Labour Market Policies in the
UK - Is the British Success - Story
Coming to an End?”
Shruti Singh, Economist
UK Department for Work and Pensions
CICERO FOUNDATION SEMINAR
PARIS 15 FEBRUARY 2007
1
INTRODUCTION
This presentation will cover…
1.
What has the UK achieved so far?
2.
How has it achieved its success?
3.
Future Challenges: can the UK go further?
4.
Conclusions
2
78
76
74
72
70
68
66
64
62
Percentage of Working Age Population (%)
…One of the highest working age employment
rates…
2006 Q1
2005 Q1
2004 Q1
2003 Q1
2002 Q1
2001 Q1
2000 Q1
1999 Q1
1998 Q1
1997 Q1
1996 Q1
1995 Q1
1994 Q1
1993 Q1
1992 Q1
1991 Q1
1990 Q1
1989 Q1
1988 Q1
1987 Q1
1986 Q1
1985 Q1
1984 Q1
1983 Q1
1982 Q1
1981 Q1
1980 Q1
1979 Q1
1978 Q1
1977 Q1
1976 Q1
1975 Q1
1974 Q1
1973 Q1
1972 Q1
1971 Q1
3
…And one of the lowest unemployment
levels for over 25 years…
3500
3000
2500
2000
1500
1000
Claimant Count
ILO Unemployment
500
0
2006 Feb
2004 Dec
2003 Oct
2002 Aug
2001 Jun
2000 Apr
1999 Feb
1997 Dec
1996 Oct
1995 Aug
1994 Jun
1993 Apr
1992 Feb
1990 Dec
1989 Oct
1988 Aug
1987 Jun
1986 Apr
1985 Feb
1983 Dec
1982 Oct
1981 Aug
1980 Jun
1979 Apr
1978 Feb
1976 Dec
1975 Oct
1974 Aug
1973 Jun
1972 Apr
1971 Feb
4
…with major improvement in long-term
claimant unemployment..
1,400,000
Aged 18-24 on JSA over 1 year
1,200,000
All on JSA over 1 yr
1,000,000
800,000
600,000
400,000
200,000
5
2004
2001
1998
1995
1992
1989
1986
1983
1980
1977
1974
1971
1968
1965
1962
0
The UK has one of the strongest labour markets
in the world..
Employment 2005
80%
Percentage Employed
70%
60%
50%
40%
30%
20%
10%
0%
UK
Canada
US
Japan
Germany
France
Italy
Source: OECD
6
Employment rates amongst most groups in
the UK are above the OECD average…
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Total
Men
Women
UK
Young
Prime Age
Older
OECD
7
…While Unemployment and Inactivity Rates are
relatively low…
10
40
9
35
Percentage Unemployed
8
25
6
5
20
4
15
3
10
2
5
1
Ita
ly
S
Ja
pa
n
G
er
m
an
y
Fr
an
ce
U
da
an
a
U
Unemployment 2006
C
U
K
0
S
Ja
pa
n
G
er
m
an
y
Fr
an
ce
Ita
ly
(ju
ne
)
U
K
(S
ep
t)
C
an
ad
a
0
Inactivity 2005
Source: OECD
8
Percentage Inactive
30
7
Expenditure on labour market programmes
as a percentage of GDP…
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
s
ce anyland l andr waypain ugal It aly stri a l andgary land eceubl ictralia ada UK panor ea bli c US xico
nd mar kedenl gium
n
a
a
l
r
r
Ja K epu
n w e F er m Ir e Fin No S Por t
Au i tzer Hun Zea GreRep Aus Can
Me
R
G
t he De S B
w
e
w
k
S
N
va
Ne
ech
Cz
Slo
Source: OECD
9
Key elements that have contributed to the
success so far…
• Macroeconomic Stability
• Flexibility and Diversity
• Making work pay: National Minimum Wage and tax credits
improve incentives to work for low income households
• Active Labour Market Policies:
- Jobcentre Plus: Rights & Responsibility agenda, Assisted
job search, continuous labour market attachment
- New Deals: reduce long term unemployment, Gateway to
training/retraining
10
Future Challenges: Can the UK do
more…?
11
28
27
26
25
24
23
22
21
20
19
18
17
16
15
13
12
11
10
9
8
7
6
5
4
3
2
1
0
Economic Inactivity
ILO Unemployment
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
12
Unemployment Rate
Inactivity Rate
The key problem is now economic inactivity
not unemployment…
…and because the vast majority of claimants of
inactive benefits are economically inactive,
most are not looking for work…
3,000,000
Inactive
ILO unemployed
2,500,000
In employment
2,000,000
1,500,000
1,000,000
500,000
0
JSA 18-24
JSA 25-49
50 and over
Incapacity Benefits
lone parents
any other form of IS
13
S
nd
la
K
ed
en
Sw
Ire
U
st
ra
l
et
he ia
rla
nd
s
C
an
ad
a
Au
st
ria
G
er
m
an
y
D
en
m
ar
Be k
lg
iu
m
Sl
ov Fra
nc
ak
e
R
ep
ub
lic
O
EC
D
N
Au
U
la
nd
Ze
a
30
ew
35
N
Sp
ai
n
Ja
pa
n
% OF THE WORKING-AGE POPULATION
…And other countries face similar
problems…
40
Other benefits
Unemployment benefits
Sickness & Disability
Old age & early retirement
25
20
15
10
5
0
14
What are we doing about it…?
• The UK Government’s long-term aim is to achieve an
employment rate equivalent to 80 percent of the
working age population
•Including a million less on incapacity benefits, a million
more older people in work, 300,000 more lone parents
in work
•Which means tackling inactivity and worklessness,
particularly in the most deprived areas
15
We have begun to make a difference amongst
lone parents and those on Incapacity Benefit…
1) Reform Incapacity Benefit, for sick and disabled:
- Set up of Pathways to work (PTW)
- PTW includes mandatory WFIs
2) Increase incentives for Lone Parents to enter or re-enter
the labour market:
- New deals extended to lone parents
- Tax Credits
3) Extending working lives:
- age discrimination legislation
- Increase in State Pension Age
- Age positive campaign
16
Which is reflected in benefit claims and
employment rates…
• The number of lone parents on benefits have declined by
235,000 to 775,000 compared to over a million in 1997.
•The number of people on Incapacity benefit have declined by
almost 92,000 from May 2003 which was its highest peak since
1997
Employment rates
1999
2006
Sick and Disabled
42.0%
48.0%
Lone Parents
48.1%
56.4%
Older Workers
66.5%
70.8%
17
Conclusions: There is more to do..(1)
• UK has done exceptionally well in reducing unemployment
• Has one of the strongest labour markets in the world
• It has achieved this through a number of policy
interventions,
However there is still more to do
• Next stage of Welfare Reform
- changes in the benefit structure (Incapacity Benefit)
18
Conclusions: There is still more to do (2)
Moreover, need to provide support for other
disadvantaged groups…
•certain areas, especially major cities
•some minority ethnic groups
•people with low or no qualifications
•transition from school to work
19
ANY QUESTIONS?
20
Extra
21
If people are looking for work, they find work…
Flows from unemployment and inactivity in one quarter into employment in the next quarter
(excluding those moving from education and those entering retirement, longitudinal LFS)
ILO unemployed; actively seeking, wanting work
Inactive; not seeking, wanting work
Inactive; actively seeking
Inactive; not seeking, not wanting work
40
35
25
20
15
10
5
sa
93
w
s9
4
sa
94
w
s9
5
sa
95
w
s9
6
sa
96
w
s9
7
sa
97
w
s9
8
sa
98
w
s9
9
sa
99
w
s0
0
sa
00
w
s0
1
sa
01
w
s0
2
sa
02
w
s0
3
s9
3
0
w
percentage
30
22