We need a firm limit on the time we are prepared to tolerate anyone being unemployed


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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:

UK-long-term-unemployed-1995-2012
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.

 


See also:

The US has turned a corner in unemployment; can we follow them? 6 Feb 2012

Ignore Osborne’s spin; a jobs recession is inevitable 1 Nov 2011

IMF: Cutting the deficit too fast causes higher unemployment 19 Sep 2011

Labour market weakness continues – while help for long-term unemployed is cut 13 Oct 2010

The questions that George Osborne must answer 17 Nov 2009


 

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.

 


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  • 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?

  • http://twitter.com/BenBaumberg 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’!

  • Eric Greenwood

    Ok Graham.. I challenge you have you experienced these work programme schemes.. How do you explain they are ineffective. It is easy for you who has probably never experienced true unemployment, the true attitudes of employers towards the unemployed. But once again its another Blame the unemployed for not getting jobs. THERE ARE NO JOBS.. If you check some of teh figures there are far more unemployed but are not on JSA, or even on the job centres books. or the underemployed.

    I Challenge you again Graham, Live like the unemployed for a month. try applying for hundreds of jobs, and not even getting a reply, because they are getting 200 plus people applying for the same job.. So lets punish the unemployed for the failure of employers to hire them.

    It must be nice to live in an ivory tower.

  • Anonymous

    Why are constructed jobs, which will destroy real jobs and wages “central” to anything but the Labour centralists? It’s definitely NOT left-wing thinking.

    The entire POINT of his post is about removing benefits after a period, which can then be pushed to shorter and shorter periods. Never mind that in other countries, the time-limited benefits for losing a job are, again, % salary and NOT a quarter of the minimum wage…

  • Golookgoread

    What sorts of guaranteed jobs are we talking about here… whatever the language being used? Currently under the Work Programme rules, when somebody has finished two years with the Work Programme, then the Jobcentre can send the unemployed person onto Mandatory Work Activity… in effect these are the same kind of jobs as somebody who has been issued community work through the criminal justice system.

    I am discriminated by job agencies on the grounds of my age. I do not receive replies from employers primarily because of my age (53yr).

    As for myself, I struggled to do everything in my power to achieve my very reasonable ambition to have a fulfilling career… in my case it was as in adult education. At the end of my career, I do deserve to be guaranteed a job which ignores my hard-worked for achievements (i.e: what once used to be my ‘potential’). In a job market where job agencies are NOT regulated (hence they automatically filter unemployed people aged 50+).
    Employers are not taking older people, they are not offering the apprenticeships, re-training. I can type at 55+ words per minute (in English, Spanish & Italian), I hold two Higher Education qualifications and a dozen Vocational Certificates which I worked damned hard to obtain… I am still not competitive in todays’ job market even with those… do I really deserve to start again from scratch, doing elementary dead-end work for below the minimum wage?

    Who would you like me to be Mrs Bridges? Rose? Lily? From “Downstairs” because I really took an unintentional tumble from “Upstairs”, a modest working-class “Upstairs” it was hence, after three years I should accept a modern equivalent of domestic servitude, which my 20th Century ancestors rejected in order to have more fulfilling jobs in offices and factories instead? Or should I willingly sign up to go to war instead? How many 50yr+ olds are getting internships in charities these days? How many 50yr+ olds are getting past the entrance to the reception? “What guarantee? What job? Even charities are discriminating against older career changers by hiring City workers on secondments! All employers want the equivalent of “convenience ready-meals” in the people they are hiring, so the job agencies keep telling me about their clients’ needs.

    So… wage discrimination, class discrimination, re-training discrimination, all these kinds of discriminations get swept under the carpet if after three years I haven’t successfully found an employer? “I think I have just about lost the will to live” What a fascist country this my country has become.

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  • Graeme Cooke

    Hello Newsbots9
    I’m not sure you read my article! My argument is about the terrible waste and unnecessary damage done by long tern unemployment – and the fear that the government’s Work Programme won’t be enough in response.
    I think it’s a bit harsh to accuse me of an OUTRIGHT SCAM! My graph refers to the ILO measure of unemployment, but policy necessarily focuses more sharply on those claiming benefit. It wasn’t a very effective OUTRIGHT SCAM seeing as how quickly you spotted it!!
    Anyway, my aim is to put a limit on how long people are on JSA – but through the government stepping in as an employer of last resort (the TUC have done a lot of good thinking about this, among others). Rather than leaving people to live on pretty meagre benefits it would provide people with paid work – stepping in to correct a market failure.
    I like your plan for making better use of the phone and internet for job search
    Cheers, Graeme

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  • Graeme Cooke

    Hi Ben
    I do mean that the job guarantee should be paid at least the minimum wage. This is vital to prevent the undercutting you mention. This is exactly what happened under the Future Jobs Fund, which the current government scrapped.
    Cheers, Graeme

  • Graeme Cooke

    Hi Bill
    I don’t understand your point? I don’t have a mortgage…and why would a Tory pay for it?! It’s a nice idea, but sadly not. And I wouldn’t jump off a roof for anyone!!! Not even my Mum.

  • Anonymous

    I read your article.

    What I’m saying about job searches shouldn’t be a surprise for anyone – it’s the system used in better organised countries for years. And no, I don’t believe propping up the jobcenters – now THERE is an army of useless drones – employment is worth it.

    The ILO measure of unemployment versus LONG term unemployment are very different things again. Long-term unemployment of the non-disabled was very low under Labour, giving the Tories fuel for the fire as you have here is a truly bad idea.

    I’m completely against the distortion of the free market this would cause, bluntly – ensuring that people can find work themselves with government support should be the focus, trying to force a tiny number of unproductive people into work at great cost – giving the state draconian new powers and opening the door to concepts to punish the poor in new ways – isn’t economically sensible.

    (And I’m quite happy for a few thousand people to coast through life on very very low state incomes, when rooting them out will cost hundreds of millions and affect civil liberties, to be clear)

    This is one of the areas where I think the TUC are dangerous close to the edge with, myself, as a mutualist. Opening up new ways of providing credit to business and checking the power of capitalism will do FAR more for the economy.

    Even if arguably you’re correct – and I disagree with the state having the power to force people into certain jobs – then it’s something which shouldn’t even be considered until we’ve done everything else reasonable to ensure that people have a decent chance of getting a job!

  • Graeme Cooke

    Hi Ben
    Thanks for your comments, as always. I understand your concern but I think there is some merit in framing a job guarantee proposal as putting a limit on the amount of time that we, as a society, are prepared allow people to be unemployed. And if the market fails to provide work, the government must step in (for good economic as well as social reasons). I think this would be a far more constructive – and progressive – response to concerns about ‘people on benefits’.
    Cheers, Graeme

  • Graeme Cooke

    That really isn’t the entire point of my post. It really isn’t. I want to limit the amount of time someone can be on JSA by providing them with a job – not leaving them out of work and without benefit.

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  • Graeme Cooke

    I don’t know if the work programme will be ineffective, but it might be. So it is worth thinking about what more might be needed.

    Also, my point is exactly the opposite of blaming the unemployed for not getting jobs. I am saying that because the labour market is failing to provide work for for people unemployed for some time, the government should step in.

  • Anonymous

    Given how badly every single “work” scheme has failed, given the massive costs involved, given the way in which there is virtually no way to do these programs in ways which will not displace other jobs…

    Moreover, again, the consequences ripple down the line, and you cannot assume that the major negative ones won’t be used as a weapon against the poor, as other changes have and are by the Tories.

    Some of what you’ve said I assume is simply careless wording – I do take it you mean “claimants” and not “unemployed”, for instance – but it’s the type of proposal which lets the right turn round and say “we’re proposing much the same” when they actually propose something truly nasty.

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  • Bob Mouncer

    So in an environment where “the public sector [is] continuing to cut jobs and new job opportunities in the private sector [are] relatively scarce”, the solution is to punish the victims by taking away their benefits? How is this putting a Left Foot Forward? And IPPR claims to be involved in “progressive” research? Give us a break.

  • Vanesa

    I would really like to know how and who is going to created and fund 25 hrs of paid employment for, as Graeme stresses, more than half of people going through the Work Programme which will not find sustained employment, which taken the figures in this article means around 500,000 people.

    As Graeme says “with the public sector continuing to cut jobs and new job opportunities in the private sector relatively scarce” I don’t think that the relatively ‘nice idea’ of a “job guarantee” is very realistic, so I would not go in into what kind of jobs are this Graeme is proposing: long-term of just a tokenistic short term ones, etc., etc.

    What this relatively ‘nice idea’ does again is framing the discussion of unemployment by blaming the person without a job (before or at the end of whatever programme), rather than concentrating on the fact that there are not enough jobs, and that people encountered many barrier to enter and sustain one of the few low-paid jobs that there are. An issue that is too big to discuss in a comment.

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