Long-term Unemployment and the Recession

The number of people unemployed in the three months to June fell by 46,000 to 2.56m – how do we square this fact with the continuing recession? In the second quarter of 2012 the revised GDP Growth Rate was -0.5%.

It is not uncommon for a set of economic statistics to be interpreted different ways to further an existing political agenda. It is rather more uncommon when a single set of statistics seem to be inconsistent with dogma from either the left or right.

Secretary of State for Work and Pensions Iain Duncan Smith attributed the growth to the ‘robustness of the private sector’ but was non-committal with regards analysis of what the fall in unemployment meant for the economy. His Labour counterpart, Liam Byrne pointed out that while any fall in unemployment is a good thing, the figures masked serious deficiencies as 90% of the jobs growth had occurred in London, and many other parts of the UK actually suffered a net jobs loss in the period.

The Olympics has been cited as the most obvious reason for the fall – and indeed, London accounted for 42,000 of the jobs created, which may prove to be purely a temporary boost and not a long term sign of regrowth.

But under the surface there are some serious deficiencies in the labour market. Underemployment is less theorised than unemployment, but just as detrimental to the economy. The number of people working part-time because they could not attain full-time employment increased by 16,000 to a record high of 1.42m.More worrying still was the fact that the number of people suffering from long-term unemployment – being unemployed for a year or more - rose by 1,000 to 882,000.

It is for this reason we need to take decisive action and deal with the root of the problems in our Labour market. We need to find innovative approaches to help the long term unemployed back into work that attempts to deal holistically with the many barriers to attaining meaningful employment.

Key to achieving this is taking into account the wider personal circumstances and life stories of the long term unemployed; and of the various dilemmas and stages they go through in their fight for sustainable employment. Many organisations claim that their services take a holistic approach, but it is possible that these could be further enhanced through more extensive use of ‘systems-based approaches’ that look at every factor that can affect someone’s employability, and build this into a personalised, peer-supported service model.

This is why the RSA will be running a consultative workshop in early September with leaders from business, academia, think tanks and work programme providers to formulate a ‘whole person’ approach to the issue of long-term unemployment, in order to deliver a fresh approach that does not duplicate existing work and produces actionable research.

Tackling unemployment and underemployment is the key to helping the United Kingdom to emerge from recession and create sustainable growth. There is hidden potential in our labour markets that we have not yet tapped into that can aid our recovery.