Jobs Deficit Could Undermine Welfare Reform Plans Says Think Tank

The Government has been warned that its proposed flagship employment programme could be undermined because “there simply aren’t enough jobs out there” to get the jobless back to work.

The warning comes from a report released by the influential think tank, the Institute for Public Policy Research, (ippr).  It points out that the number of people unemployed for a year or more has doubled to 797,000 over the last two years, while the number of job vacancies has fallen to 467,000 – creating a “jobs deficit” of 330,000 which is likely to persist until the end of next year.

Nick Pearce, director of the ippr, commented: “Our analysis shows that the Government’s Work Programme could struggle, not because it is ill-conceived, but because there simply aren’t enough jobs out there. It was hard enough to get the long-term unemployed into work during the boom years, now because of the downturn there are far fewer vacancies so it’s going to be harder still.”

Under its new Work Programme, the Government will pay private and voluntary sector providers to place the long-term unemployed back into work. The scheme “depends heavily” on jobs being available, but according to the ippr, there are currently more than one in five people chasing every job in Britain.

The ippr report also calculated long-term unemployment was likely to climb to about 875,000 by the end of 2011, while the number of jobs available would reach around 550,000, meaning the jobs gap would persist for at least another year.

The ippr recommends that welfare-to-work providers target small businesses in emerging sectors to help them expand or invest in workforce training to create jobs. One idea is that welfare-to-work services could place unemployed workers in companies as substitutes for employed workers who may be off sick or on maternity leave. Employers would be able to hire the substitute worker at a lower cost, as “they need not be at the same level as the employee they replace”, the report said. Countries such as Finland and Denmark already do this, the ippr said.

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