Government faces unemployment battle
By Phil ScullionFollow @PhilScullion
Britain faces an uphill struggle against unemployment with up to two million new jobs needed to return employment rates to pre-recession levels, according to a leading think tank.
In response to the poor short-term economic outlook, the Institute for Public Policy research recommended an increase in the government's capital spending.
Tony Dolphin, IPPR associate director for economic policy, pointed to the importance of promoting a "speedy return" to full employment in the UK.
He said: "There is little evidence to suggest the private sector will be able to meet the challenge over the next four years without help from government.
"Over the last twenty years the public sector has been filling a void in private sector job creation according to the IPPR, a trend which they say must be reversed."
The Office for Budget Responsibility (OBR) has already painted a gloomy picture of the challenge. They predicted that even though the private sector will create 1.5 million jobs over the next five years it will not be sufficient to negate public sector job cuts, bring down unemployment or mop up new entrants to the labour market.
The IPPR report suggested that in the long term the government would need to increase employment levels from below 71% to 80%.
Prior to the recession it stood at 73%.
Such a change would raise up to £20 billion in extra tax and national insurance revenues.
However ministers face a tough battle to achieve this, particularly in an atmosphere of swingeing public sector cuts.
Mr Dolphin added: "The longer someone is unemployed, the less likely they are ever to return to work.
"If we are going to provide decent services for our ageing population and clear the deficit, we need as many people in work as possible to maximise tax revenues. We cannot afford to let people permanently drift away from the jobs market."
A number of mainstream economic forecasters, including the OBR, believe that the UK will struggle to achieve full employment by the beginning on 2016, a full eight years after the recession began.
The IPPR report argues that a slow recovery increases the risk that people will become discouraged from working and then leave the workforce permanently once their skills have become redundant.
Regional differences are also highlighted in the report, with employment rates growing 17% more in London between 1993 and 2008, compared to the North East and North West.
Kenny Boyle, director of Working Links, emphasises the "vital role" played by work programmes in difficult economic times.
He said: "It is important for organisations like Working Links to continue to monitor labour market trends and work closely with employers to ensure jobseekers find jobs they are capable of doing.
"Training, whether it is to top up existing skills or retraining for a new career, is important not only for personal development but will also help Britain recover from the economic downturn in a better position.
"We work closely with employers and sector skills councils to deliver tailored training to the exact needs of employers with our extensive knowledge of local, regional and national labour markets, enabling firms to take on job-ready long-term unemployed people."
IPPR analysis points to those with few or no skills as likely to face the toughest time in the labour market over coming years.
Additional recommendations by the IPPR include a job guarantee scheme for those out of work for over twelve months, retraining of those made redundant and the provision of universal healthcare to support a higher employment rate.
They also support a greater role for work programme providers in the promotion of apprenticeships.
Mr Boyle said: "Going forward, it is important to highlight the benefits that Apprenticeship schemes can bring to employers of all sizes.
"Our recent research shows that 80% of employers believe apprenticeships will help reduce youth unemployment and an overwhelming 100% of employers felt that Apprenticeships give young people the skills they need to find lasting work.
"It is vital to recognise the types of qualities and skills that employers value most and how best to provide these to young people. The pre-Apprenticeship training that Working Links is helping to deliver is especially key because it is the first step to ensuring candidates are work-ready and have the necessary soft skills needed to succeed."
