IPPR's Spencer Thompson looks at solutions to the scourge of long-term unemployment.
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.
With 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:
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.
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• Making work pay: Balls announces compulsory jobs guarantee for long-term unemployed – January 4th, 2013
• New research shows 400,000 people will spend a second successive Christmas on the dole – December 20th, 2012
• Job Guarantees give hope to long-term unemployed – March 30th, 2010