Working alternatives, by Nigel Meager

19 Apr 10
High unemployment remains a burning issue, but other policy priorities as the UK emerges from recession include the need to increase productivity, the changing demand for skills, and the need to reduce spend on welfare.

As the election campaign gathers momentum, the likely result is increasingly unclear. Whichever party or parties take office in May, several important employment and skills issues will need immediate attention to support the economic recovery, help minimise public expenditure and improve working lives.

High unemployment remains a burning issue, but other policy priorities include the need to increase productivity, the changing demand for skills, and the need to reduce spend on welfare.

The Institute for Employment Studies has  identified what we believe are the six key policy areas that need to be tackled and the best solutions to raise employment and skill levels across the UK.

Previous recessions have resulted in an unemployment ‘aftershock’ where several generations of the same family remain out of work, and careers are blighted by unemployment experience early in life. The key to avoiding this happening again is to minimise long-term unemployment by encouraging people to find and get the jobs that are available. This will require a combination of personalised support with job search and training in the kinds of skills employers value (such as IT, customer service and literacy abilities) together with a tighter link between benefit eligibility and job-search activity.

In some geographical areas, where local concentrations of unemployment are found alongside weak prospects for new employment, job creation programmes or job subsidies will be required. It is notable that many of these areas (including parts of urban Scotland, Wales and the North West) are also heavily dependent on public sector employment; while recent claims of 500,000 job losses in the public sector may be wide of the mark, it is inevitable that public sector employment will be cut back, just as the private sector is emerging from the recession, with significant potential impacts on some struggling local economies.

Young people not in education, training or work (NEETS) also warrant special measures. Wide-ranging, flexibly delivered education curriculums adapted to their personal needs coupled with the alternative of effective vocational training from the age of 14 for those who do not want the traditional classroom-based academic approach will minimise the number of young people in this situation. Once they have become NEET, young people need personalised support to help tackle their multiple problems together with access to personal development, non-qualification-based learning or work experience to rebuild confidence and get them back to work or learning.

The downturn has led to a rise in demand for higher education, to the point where this outstrips the country’s ability to pay for it. Additionally, the supply of graduates is more than the current market requires and thus the wage and value premium enjoyed by this group is starting to diminish. As public expenditure is scarce, the financial burden on students will have to increase but students from poorer backgrounds will need more encouragement and financial help if they are not be put off from applying by higher university fees.

In addition, tackling the demographic age shift, improving health at work and matching the skills of the workforce to the likely needs of future jobs in the UK are also key priorities for policy-makers. Whichever party comes to power, we hope that these six areas are high on their agenda.

Nigel Meager is Director of the Institute for Employment Studies. The full IES whitepaper can be downloaded from www.employment-studies.co.uk

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