Labour market interventions reduce real cost of recession

The Express today claim that 'Benefits cost families £20 a week.' But the impact of the recession on employment was much worse in the 1980s.

On the day when unemployment surprisingly fell, the Express have a particularly pernicious story about how ‘Benefits cost families £20 a week.’

The article in today’s paper says:

“MINISTERS faced fury last night after it was revealed Labour’s welfare benefits bonanza costs the average working household almost £1,000 a year or £20 a week.

“The soaring bill to fund Britain’s army of jobless has cost the country more than £28 billion for every year under Labour.”

A Labour spokesman told the Telegraph last month that, “[The Tories] spent twice as much on unemployment benefits in the 12 years before 1997.” Looking at the following graph it is easy to see why.

The graph clearly shows that in the downturns of the 1980s and 1990s, unemployment hit 10 per cent. In this recession, although there is a risk that unemployment may increase again, it appears to have peaked at 5.1 per cent despite the record drop in GDP. Although the Express would never admit it, active labour market interventions in this recession appear to be making the difference and keeping down the costs of the recession. Commenting on the figures, TUC General Secretary Brendan Barber said:

“Government investment to help people off the dole and stimulate the economy has ensured that joblessness has not spiralled out of control in the way it did in earlier recessions. But this is no time for complacency, especially while many – particularly the young – still remain out of work.”

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