Society should place a firm limit on the amount of time we are prepared to tolerate anyone being unemployed, writes IPPR’s Graeme Cooke.
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Graeme Cooke is an associate director at the Institute for Public Policy Research (IPPR)
Long term unemployment has more than doubled since the start of the recession. As Graph 1 shows, the number of people out of work for more than a year has risen from around 400,000 in 2007 to reach 855,000 in the three months ending in January 2012.
The majority of people who lose their job find another one fairly quickly, even in a recession – but those who suffer a prolonged period of unemployment risk losing touch with the labour market and face permanently reduced work and income prospects, not to mention the detrimental health and social impacts of being without work.
Graph 1:
Tomorrow’s labour market statistics are likely to see the jobless total rising on a quarterly basis for the ninth consecutive month and the Office for Budget Responsibility (OBR) predicts the unemployment rate will increase to 8.7 per cent by the end of the summer.
With a total of 2,666,000 people already looking for work, IPPR analysis suggests the unemployment total will rise by a further 100,000 in the coming months. As other respected analysts have shown, this is both unnecessary and damaging – both to individual’s lives and the national economy.
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Based on the OBR projections and current patterns of unemployment flows and durations, IPPR also expects the number of people out of work for a year to go up by a further 107,000 by the end of the year to hit almost a million – 962,000.
This is the ‘hidden crisis’ of the current era of stagnation that the British economy is experiencing.
With the economy likely to just about avoid a double-dip recession, there is no immediate reason to expect the headline unemployment total to spike. But neither is there sufficient growth for unemployment to fall.
In this situation, with the public sector continuing to cut jobs and new job opportunities in the private sector relatively scarce, the penalty for being out of work for longer rises – compounding the original problem.
The big worry is whether, when stronger job growth does return, people who have experienced long term unemployment will be able to take advantage. Our society is still grappling with a disastrous legacy of this kind from the 1980s and 1990s recessions: high levels of worklessness, poverty and benefit spending.
There is already some evidence a similar problem might be being stored up again. Before the recession about one in five unemployed people had been out of work for a year. That proportion is now up to a third (during a period when the denominator in that equation has been rising rapidly).
And while there has rightly been a strong focus on youth unemployment, it is worth noting that more than two-fifths (43 per cent) of the over-50s who are out of work have been unemployed for more than a year.
The government’s response to this problem is its flagship Work Programme. It is too early to tell how effective this policy is being, though there is no obvious dent in the unemployment numbers despite provider contracts being up and running for many months now.
Concerns have already been raised about the likely effectiveness of the Work Programme and even under the best possible performance scenarios, less than half of people going through it will find sustained employment.
So what happens to those who don’t?
At the very least, the government should introduce a job guarantee for those reaching then end of their Work Programme placement without a job, who would at that point have spent three years out of work.
This should provide 25 hours of paid employment, combined with on-going support and job search, which individuals would have to take up or face losing their benefits. It would effectively create a time-limit on JSA.
As we learn more about how well providers are getting on, the debate about the best way to prevent the human and economic tragedy of long term unemployment will sharpen; IPPR believes that while the state, private and charitable sectors all have a vital role in supporting people into work, society should place a firm limit on the amount of time we are prepared to tolerate anyone being unemployed.
49 Responses to “We need a firm limit on the time we are prepared to tolerate anyone being unemployed”
Anonymous
Ah yes, time-limiting JSA. And the program at the end would then be cancelled when it became clear it wasn’t “working”.
The jobs ARE NOT THERE. The sociak support network is already SO thin, the JSA is less than the BASIC welfare payment, let alone the %salary unemployment payment in most Western countries! (Even America uses 60%) Typical Tory policy, punishing the poor for not only losing a job and being plunged into immediate desperate poverty (and socially cleansed), but trying to starve them as well.
The “job guarantee” is also a lovely way to slash wages on many jobs as well, of course.
Ben Sansum
Graham,
I assume you won’t read the comments here, but feel compelled to ask – when you say:
“This should provide 25 hours of paid employment, combined with on-going support and job search”
do you mean employment paid at minimum wage?
If you do not then you should have the guts to say so, and then you should explain how flooding the jobs-market with subsidised labour that undercuts the employment costs of real jobs will help create employment for those forced to work for less than minimum wage to move onto?
Anonymous
He can’t mean that, since 25 hours at minimum wage will most definitely NOT lift people out of the Coalition’s “unified benefit”. So, it has to be a special category…
Bill Kruse
And you work for the IPPR, then, is it? So, ah, which Tory pays your mortgage, then, Graham? If they asked you to jump off the nearest roof would you do that too? Or are they content with tellling you which opinions you should have?
Ben Baumberg
Good analysis, with a terrible idea in it. Job guarantees are central to progressive thinking at the moment, and any welfare proposals should have them in centrally – and nice to see this connected to long-term unemployed, not just young people. But my describing this as a ‘time limit on JSA’, we’re opening the door to GENUINE time limits on JSA, where – if the Tories scrapped job guarantees – we’d be left with people with no proper unemployment benefit at all after three years.
As I’m starting to bang on about in things that I write, we HAVE TO THINK ABOUT THE LONG GAME here. Surely we’ve learned this from the way the Conservatives are extending Labour policies on private sector involvement in the NHS, increasing means-testing in welfare etc… So please – keep the idea, but ditch the language of ‘time-limiting’!