1. 1 Active Labour Market Policies in the UK - Is the British Success - Story Coming to an End? Shruti Singh, Economist UK Department for Work and Pensions CICERO FOUNDATION SEMINAR PARIS 15 FEBRUARY 2007

2. 2 INTRODUCTION This presentation will cover… 1.What has the UK achieved so far? 2.How has it achieved its success? 3.Future Challenges: can the UK go further? 4.Conclusions

3. 3 …One of the highest working age employment rates…

4. 4 …And one of the lowest unemployment levels for over 25 years…

5. 5 …with major improvement in long-term claimant unemployment..

6. 6 The UK has one of the strongest labour markets in the world.. Source: OECD

7. 7 Employment rates amongst most groups in the UK are above the OECD average…

8. 8 …While Unemployment and Inactivity Rates are relatively low… Source: OECD

9. 9 Expenditure on labour market programmes as a percentage of GDP… Source: OECD

10. 10 Key elements that have contributed to the success so far… Macroeconomic Stability Flexibility and Diversity Making work pay: National Minimum Wage and tax credits improve incentives to work for low income households Active Labour Market Policies: - Jobcentre Plus: Rights & Responsibility agenda, Assisted job search, continuous labour market attachment - New Deals: reduce long term unemployment, Gateway to training/retraining

11. 11 Future Challenges: Can the UK do more…?

12. 12 The key problem is now economic inactivity not unemployment…

13. 13 …and because the vast majority of claimants of inactive benefits are economically inactive, most are not looking for work…

14. 14 …And other countries face similar problems…

15. 15 What are we doing about it…? The UK Governments long-term aim is to achieve an employment rate equivalent to 80 percent of the working age population Including a million less on incapacity benefits, a million more older people in work, 300,000 more lone parents in work Which means tackling inactivity and worklessness, particularly in the most deprived areas

16. 16 We have begun to make a difference amongst lone parents and those on Incapacity Benefit… 1)Reform Incapacity Benefit, for sick and disabled: - Set up of Pathways to work (PTW) - PTW includes mandatory WFIs 2) Increase incentives for Lone Parents to enter or re-enter the labour market: - New deals extended to lone parents - Tax Credits 3) Extending working lives: - age discrimination legislation - Increase in State Pension Age - Age positive campaign

17. 17 Which is reflected in benefit claims and employment rates… The number of lone parents on benefits have declined by 235,000 to 775,000 compared to over a million in 1997. The number of people on Incapacity benefit have declined by almost 92,000 from May 2003 which was its highest peak since 1997 Employment rates 19992006 Sick and Disabled42.0%48.0% Lone Parents48.1%56.4% Older Workers66.5%70.8%

18. 18 Conclusions: There is more to do..(1) UK has done exceptionally well in reducing unemployment Has one of the strongest labour markets in the world It has achieved this through a number of policy interventions, However there is still more to do Next stage of Welfare Reform - changes in the benefit structure (Incapacity Benefit)

19. 19 Conclusions: There is still more to do (2) Moreover, need to provide support for other disadvantaged groups… certain areas, especially major cities some minority ethnic groups people with low or no qualifications transition from school to work

20. 20 ANY QUESTIONS?

21. 21 Extra

22. 22 If people are looking for work, they find work… Flows from unemployment and inactivity in one quarter into employment in the next quarter (excluding those moving from education and those entering retirement, longitudinal LFS)