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IPPR - Doubling in long-term unemployment could jeopardise Coalition’s flagship Work Programme

New analysis from the Institute for Public Policy Research (ippr) shows that long-term unemployment has doubled in the last two years to 797,000, while the number of vacancies has fallen to 467,000.  This ‘jobs deficit’ of 330,000 threatens the ability of the Government’s flagship employment scheme to get people back into work.

Under the ‘Work Programme’, contracts worth up to a total of three billion pounds are to be awarded to private and voluntary sector providers. They will offer ‘job search’ support to anyone who has been unemployed for 12 months or more.  The success of the scheme depends heavily on jobs being available yet there are currently more than five people chasing every vacancy in the UK.

ippr’s projections (based on the OBR’s forecasts for overall unemployment), suggest long-term unemployment will be even higher at the end of 2011 at around 875,000. At that point there will still be 4.6 unemployed people – and 1.6 long-term unemployed – for every 1 vacancy. If economic growth over the next few years follows the moderate path set out by the Office for Budget Responsibility (OBR), ippr’s calculations suggest vacancies are unlikely to increase to more than 550,000 by the end of 2011.

The findings come in a major report entitled Now It’s Personal: The New Landscape of welfare-to-work, which recommends a range of reforms to the UK’s welfare-to-work system.

ippr argues that to most effectively tackle job shortages, detailed local knowledge and intelligence is needed, yet the UK has one of the most highly centralised welfare-to-work systems in the world. The report calls for a radically devolved, localised welfare-to-work system which will allow local areas greater discretion over commissioned services and improve integration with other policy areas such as economic development, transport and housing. Specifically, the report recommends that:

  • The Department of Work and Pensions (DWP) welfare-to-work budget should be fully devolved to sub-national partnerships (groups of local authorities led by Local Enterprise Partnerships) through block grants
  • As a first step, from 2013, sub-national partnerships should be given joint responsibility to co-commission welfare to work.

To stimulate sustainable jobs placements, the report proposes that:

  • Welfare-to-work providers target small businesses in emerging sectors to help them expand or invest in workforce training to create jobs and boost productivity
  • Existing funding for schemes such as ‘Train to Gain’ should be re-directed to support this targeting
  • Employers should pay a larger share of the costs of vocational and technical skills training.

Nick Pearce, Director of ippr, said:

Our analysis shows that the government’s Work Programme could struggle, not because it is  ill-conceived, but because there simply aren’t enough jobs out there. It was hard enough to get the long-term unemployed into work during the boom years, now because of the downturn there are far fewer vacancies so it’s going to be harder still. A strategy for growth which creates jobs is part of the answer.  But our ideas show the best possible welfare-to-work service can also play an important role.  What is needed is a much more local, flexible system which can offer a highly personal service to people who’ve been out of work for a long time.

Other findings include:

  • At the end of 2011, there will be one person who has been claiming Job Seekers Allowance (JSA) for more than six months, two more people who have been claiming JSA for less than six months and two more who are unemployed but not claiming JSA, chasing every one job vacancy in the UK.
  • Regional disparities in unemployment and vacancy rates mean the ratio of unemployed to vacancies is likely to be even higher in some parts of the country, including Yorkshire and the Humber and the West Midlands.
  • As well as those who will have already been claiming JSA for over six months, around 55,000 people a month will become newly eligible for the Work Programme when it is up and running.

Notes to editors

ippr’s report Now It’s Personal: The New Landscape of welfare-to-work is available on the ippr website at www.ippr.org. The full report will be published shortly.

The latest data on unemployment as measured by the International Labour Organisation (LIO) definition of unemployment relates to August, while data on vacancies are for the period June to August. For more information see: http://www.statistics.gov.uk/pdfdir/lmsuk0910.pdf

The Office for Budget Responsibility’s labour market forecasts were published on 19 August and are available here: http://budgetresponsibility.independent.gov.uk/d/labour_market_forecasts_190810.pdf

Contacts

Tim Finch, Director of Communications: 020 7470 6110 / 07595 920 899 / t.finch@ippr.org

 

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