OECD questions Coalition decision to scrap Future Jobs Fund

The OECD’s Employment Outlook puts the need for job creation at the centre of its message. Examining the UK, there is praise for Labour’s Future Jobs Fund and “concern” about the Coalition’s decision to scrap it.

The OECD’s country report for the United Kingdom sets out that, “Considering that GDP fell by 6%, the increase in unemployment in the United Kingdom is smaller than would have been predicted based on historical experience. For example, the unemployment rate rose nearly as sharply in the 1990-91 recession even though GDP fell by less than half as much.”

The report goes on to say that:

“Effective re-employment assistance has prevented an even sharper increase in UK joblessness and should be reinforced even in the current context of fiscal consolidation…

“The introduction [by Labour] of the Flexible New Deal (FND) in October 2009 has been useful in the context of the recession because it puts an increased focus on screening skills at an early stage of the unemployment spell, targeting the low-skilled unemployed who are likely to face greater challenges in finding employment.

The document goes on to praise the “cut in employer contributions at the bottom end of the wage ladder [which] should enhance employment opportunities for this workforce group.” Although the spending cuts necessary to pay for this decision could cost 40,000 public sector jobs.

But in strong language the report questions the Coalition’s priorities:

“While the large fiscal deficit makes it essential to focus on cost-effective programmes and target the most disadvantaged groups, labour market policies should remain adequately funded. In this context, it may also be of concern that the new Budget ends funding for two crisis measures, namely, the Future Jobs Fund and the Six Month Offer.”