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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5 Responses to “Labour market interventions reduce real cost of recession”

  1. Swagata

    It’s not all ALMP. For starters, a lot of Poles have simply gone home. Thanks to Britain’s ultra-flexible employment laws, Poles and other immigrants can get fired overnight and leave the labour market altogether. Also, visit JobCentre+ today and you’ll be forced into part-time work, even zero hours contracts. This is what active policy means, nice from a cosy office in Westminster, brutal to those in unemployment blackspots. Tough love.

    Unemployment still rose by 21,000 and youth unemployment is now at a record high.

    Hopefully things will pick up.

  2. CVRepublic

    Labour market interventions reduce real cost of recession (Left Foot Forward)

  3. Rory

    Did unemployment really fall? I know that dole claims fell, but I thought unemployment increased, albeit at a slower rate?

    I wonder if Mr Straw could tell me which figures he is using?

  4. willstraw

    Hi Rory,

    It depends which measure you use. As we showed in our earlier story, the JSA claimant count went down while ILO unemployment rose by the smallest amount since May 2008. Employment increased for the first time since then too.

    Best wishes,


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