Active Labour Market Policies in the UK: What is the Secret of the British Success?

1. Active Labour Market Policies in the UK: What is the Secret of the British Success? Bill Wells: UK Department for Work & Pensions. at: ‘How to implement the Lisbon Agenda’ An International Seminar for Experts organised by the Cicero Foundation. 10-11 March 2005

2. UK Active Labour Market Policies… • The structural features of the UK labour market. • Diverse and dynamic • Work Pays • Better qualified & skilled • Centralised benefit and labour market help. • How active labour market policies fit in with the structure of the UK labour market. • Unemployment benefits • Inactive Benefits • Conclusions.

3. In terms of hours the UK labour market is very diverse… 29% work 40 hours 17 % work 50+ hours 15% work 38 hours 11 % work 40 hours 33% work 35 hours 39% work 40 hours 11% work 39 hours 15% work 36 hours

4. ..& it is dynamic. Lots of people find new jobs each year 0.8 m 4.9 m 4.9 m 0.7 m 4.7 m 0.5 m 0.13 m Source: Cross sectional LFS datasets, sum of 4 quarters

5. Other features… • People are generally better off in work. • Taxes & benefits are organised so that work pays • Individuals can take up a wider range of jobs. • Skills and qualifications are improving. • Comprehensive and centralised benefit system • Benefit payment and active labour market help can be combined.

6. From 1986 when, of those becoming unemployed... …% remaining unemployed …% leaving unemployment 52% are still unemployed after 3 months proportion leaving in first three months 48% 36% after 6 months between 3 and 6 months 16% 27% after 9 month between 6 and 9 months 9% 20% after one year between 9 and 12 months 7% 11% after 18 months between 12 and 18 months 9% 8% after 2 years between 18 and 24 months 3% 5% after 3 years between 2 and 3 years 3% 4% after 4 years between 3 and 4 years 1%

7. Unemployment Benefit System Jobseeker’s Allowance Rights & Responsibility agenda Assisted job search Increased help as duration increases New Deal Ends long term unemployment Gateway No fifth option

8. …to 2004 when, of those becoming unemployed …% remaining unemployed …% leaving unemployment 40% still unemployed after 3 months proportion leaving in first three months 60% 21% after 6 months between 3 and 6 months 19% between 6 and 9 months 10% 11% after 9 months between 9 and 12 months 4% 7% after one year between 12 and 18 months 3% 3% after 18 months 1% after 2 years between 18 and 24 months 2% 0.5% after 3 years between 2 and 3 years 0.5% 0.2% after 4 years between 3 and 4 years 0.2% Source: DWP

9. Proportion of JSA inflow leaving within a certain period All ages 4 years 3 years 2 years 1 year 9 months 6 months 3 months

10. Proportion of JSA inflow leaving within a certain period 18-24 year olds 4 years 3 years 2 years 1 year 9 months 6 months 3 months

11. Helping to deliver the best claimant unemployment record since the mid 1970s… Thousands

12. …with Jobcentre Plus and the New Deal ensuring that the long term unemployed have benefited.

13. …and so there is now little difference from the national ILO unemployment/population ratio

14. Unemployment is low. The number on lone parent benefit has fallen. And the number on incapacity benefit has peaked.

15. To make a big difference we now need to concentrate on people on sickness & disability benefits and long durations... Thousands

16. …but the problem is that people on inactive benefits are inactive… Source: Derived from DWP administrative system and Labour Force Survey . Chart should be used for indicative purposes only due to undercount of benefits on LFS

17. .and you can’t get a job if you aren’t looking for a job. Flows from inactivity in one quarter into employment in the next quarter (excluding those moving from education and those entering retirement, longitudinal LFS) Source: LFS

18. Worklessness is now primarily a problem of inactivity not unemployment…

19. Developments in Welfare to Work Policy • Jobcentre Plus: Roll out 2001 to 2006; • New Deal for Lone Parents; • New Deal for Disabled People; • Building on New Deal; and • Incapacity Benefit Reform.

20. Modern Jobcentre Plus Services Self-service and face to face advice brought together

21. Work: Families and Children Lone Parents and Partnered Mothers Employment Rates (1978 – 2004)

22. IB Reforms – Early Pathways findings Six month Incapacity Benefit Off-flows

23. The UK has one of the best labour markets in the world…

24. …with more people in work than ever before and employment rates at historic highs.

25. Meeting our aspiration of an 80% employment rate would require around 2.5 million more people in work This might involve (indicative figures): • 1 million IB claimants in work • 300K more lone parents in work • 1 million more older workers in work (incl. those post SPA) • Higher general female employment (due to better childcare)

26. Challenges for the future • Promoting fairness and opportunity for all • Incapacity Benefit • Lone Parents • Older workers (incl. equalisation of SPA) • Areas of deprivation • Ethnicity • Low skills

27. CONCLUSIONS If you look for a job… …there is a good chance that you will find one... (with a little help from your friends). The UK has done a lot… …but there is still more to do.