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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
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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
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One of the highest working age employment rates
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And one of the lowest unemployment levels for
over 25 years
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with major improvement in long-term claimant
unemployment..
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The UK has one of the strongest labour markets in
the world..
Source OECD
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Employment rates amongst most groups in the UK
are above the OECD average
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While Unemployment and Inactivity Rates are
relatively low
Source OECD
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Expenditure on labour market programmes as a
percentage of GDP
Source OECD
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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

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Future Challenges Can the UK do more?
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The key problem is now economic inactivity not
unemployment
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and because the vast majority of claimants of
inactive benefits are economically inactive,
most are not looking for work
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And other countries face similar problems
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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

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We have begun to make a difference amongst lone
parents and those on Incapacity Benefit

• 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

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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 1999 2006
Sick and Disabled 42.0 48.0
Lone Parents 48.1 56.4
Older Workers 66.5 70.8
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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)

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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

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ANY QUESTIONS?
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• Extra

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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)