The State of the Labour Market and Long-term Worklessness Dave Simmonds & Paul Bivand Centre for Economic & Social Inclusion

A resilient labour market (courtesy of Andrew Sentance) Traditional industries not affected so much Less structural unemployment Retain skilled labour Sound profitability Service sector ‘sponge’ Low productivity Driven by business services and health Under-recording of GDP Labour market flexibility Wage restraint Lifestyle Active labour market policy

But.... Based on assumption that extent of worklessness (rather than unemployment) has been better Not included those on inactive benefits Resilient analysis is based on ‘parking’ of those with ‘low productivity’

The pattern of worklessness has changed

And will change for the future… IB reassessment – 1.5 million to be reassessed Lone parent obligations – further 200,000 Universal Credit from 2013 Disability Living Allowance replacement Pension Credit eligibility changes – rising age Changing population 18-24s falling rising falling 50+ rising

Changing benefits profile

Jobless recovery? OBR employment rates

Employment not forecast to grow before late 2012

Stopping long-term unemployment - this recession and last

Work Programme - last year estimates and 2011 DWP volumes Universal Credit

What do we now think Work Programme volumes will look like

Job outcomes and vacancies

Job outcomes and GDP

Non-claimants: hidden unemployment?

Non-claimant unemployed – increasing since 2004

What do we know about non- claimants Competitors with welfare to work participants Many are long-term unemployed Looking for work and available to start – not necessarily full-time Women unemployed – half of non-claimant Young likely to be non-claimant – 55% of non- claimants in full-time education Over 50s – 43% of male unemployed, 47% of female are non-claimant

Lessons for policy Labour market will continue to be resilient with caveats Service sector still create jobs? Traditional industry opportunities Wage restraint Labour market interventions – increase effectiveness Lifestyle changes – p/t working, older workers, etc

Lessons for policy Jobcentre Plus – as effective and increased emphasis on job placement Work Programme – needs market adjustment mechanisms Need to anticipate Universal Credit Non-claimants long-term unemployed – should we do anything? Lone parents – support for those with under-5s ESA not ready for work – is 3 months right? Very long-term unemployed – multiple barriers What is the most effective job placement service?