Long-term unemployment: The national emergency that refuses to go away


Spencer Thompson is an economic analyst at the Institute for Public Policy Research (IPPR)

Last month’s jobs figures showed the labour market performing healthily on several fronts – unemployment fell, the rate of job creation was positive, and some of the traditionally hard-to-reach segments of the unemployed, including young people, have started to move into work again.

Long-term-unemployment-queueWith all this good news, however, we are in danger of forgetting the jobs market remains enormously tough for a large part of the population.

The number of people unemployed for more than a year remains worryingly high, with long-term unemployment not falling from 904,000 in Q3 2012. With the coalition’s response to this intractable issue, the Work Programme, having essentially zero impact, it is clearly time for some fresh thinking on how we can tackle this issue.

What is clear is the easing in the jobs market over the last six months or so has not made significant inroads into long-term unemployment. It is increasingly apparent the initial shock of recession and continued stagnation in the economy has created a core of hard-to-reach unemployed.

The implications of this are extremely worrying.

A wealth of research (see here, here and here) shows  a prolonged spell outside of work can have an impact on an individual’s future ability to find a job and their earnings, with knock-on effects on poverty, inequality and the productivity of the UK economy.

The coalition’s flagship policy for tackling long-term unemployment, the Work Programme, has been plagued by a flawed business model, an inability to take account of wider economic conditions, and above all, the accusation of impotence, something confirmed by the first release of work programme outcome statistics in November. My colleague Bill Davies wrote about the data on these pages. In his blog, he pointed out the Work Programme has been around a third as successful at getting the unemployed back into work as Labour’s Flexible New Deal, brought into being at the end of the last parliament.

The Flexible New Deal was by no means an unequivocal success, with only 12.4% of participants moving into work in the first 14 months, but compared to the risible performance of the Work Programme, it is favourable. Recent research (pdf) by York University for the DWP sheds more light on the issue. They find Work Programme providers have been personalising support in a way that “is often more procedural than substantive in nature”, and failing to coordinate effectively on the ground with Jobcentre Plus. It’s surely no surprise the policy has been ineffective.

And Labour? They have adopted the IPPR’s proposal for a jobs guarantee (originally suggested in this paper), which would provide everyone out of work for more than two years with a subsidised job for six months. Whilst this will hopefully encourage a welcome shift in the policy debate, we would like to see the same policy extended to all those out of work for more than a year.

The chart below shows Labour’s proposal will miss out on the almost half a million people who have been looking for work for between one and two years, and are at risk of an even longer period of unemployment or dropping out of the labour market entirely:

Number-of-unemployed-by-duration-of-unemployment
We should rightly be encouraged by recent jobs figures, but we should not forget that:

a). The job market remains tough for vast numbers of people; and

b). The policy response to the issue of long-term unemployment is not working.

With so many struggling to find work and the labour market likely to take a turn for the worse in 2013, this is an issue we can’t afford to ignore.

See also:

Making work pay: Balls announces compulsory jobs guarantee for long-term unemployedJanuary 4th, 2013

New research shows 400,000 people will spend a second successive Christmas on the doleDecember 20th, 2012

Job Guarantees give hope to long-term unemployedMarch 30th, 2010

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  • Old Albion

    I know! Why don’t we allow thousands/hundredsof thousands/millions of Bulgarians and Romanians to stroll into Britain. That should help………………………..

  • Ash

    Here’s what sickens me:

    Long-term unemployment is high, but the Tories want us all to believe it’s even higher. The fact that two-thirds of the people who are currently out of work were actually *in* work before last year’s double-dip recession doesn’t fit their narrative at all. Nor does the fact that more than 80% of them were in work before the Coalition came to power.

    Because we’re supposed to believe that the unemployed are not, by and large, working people who have recently lost their jobs. No, they’re mostly ‘scroungers’ and ‘skivers’ who decided years ago, under the last Labour government, to ‘live a life on benefits’.

    Never mind that long-term unemployment fell from over a million under John Major to under three hundred thousand under Tony Blair –

    http://www.leftfootforward.org/2012/04/long-term-unemployment-scandal/

    – making a complete nonsense of the idea that Labour engineered an explosion in the number of people viewing long-term unemployment as a ‘lifestyle choice’.

    Labour should be drawing attention figures like these, just as they did to the fact that 60% of households affected by the benefit cap are working households. That simple statistic completely demolished the Tories’ narrative.

  • Newsbot9

    I know, why don’t we cause a moral panic, based on nonsense, causing social unrest and violence. Same old, same old!

  • Newsbot9

    Three hundred thousand ?

    Well, the 3+ years, rather than the 1+ years, was SINGLE figure thousands during those years.

  • Newsbot9

    Zero? Workfare is not having a zero effect, it’s replacing paid jobs!

    Moreover, a “subsidised” sub-minimum wage job, which destroys the concept of the minimum wage and is just another punishment for being “unwanted” in the economy…

  • Ash

    Do you have a link for those figures? I only found the 1+ years numbers.

  • Newsbot9

    It was linked in an article some time on this website…hmm…

    I can’t find it offhand. But here are some good 1+ year figures;

    http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tsdsc330

    Shows that you can have highly successful economies with both high and low long-term unemployment… (Germany and the Nordics respectively)

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