400,000 people out of work for more than 2 years may never work again

Published Sun 28 Aug 2011
IPPR analysis indicates that 100,000 older workers aged 50+ who lost their jobs at the start of the recession are now at risk of being forced to retire earlier - with a lower pension - than they planned.

More than 400,000 people have been out of work for more than two years, according to analysis of the latest Government data by think tank IPPR.

A new IPPR report published later this week suggests that being out of work for more than two years severely curtails the chances of someone getting a new job. IPPR analysis indicates that 100,000 older workers aged 50+ who lost their jobs at the start of the recession are now at risk of being forced to retire earlier - with a lower pension - than they planned.

IPPR's analysis shows that the number of people out of work for more than two years is now the highest since 1997 and has more than doubled since the financial crisis of 2008. Since 2008, overall unemployment has risen by 49 per cent but the number unemployed for more than two years has risen by 114 per cent.

IPPR's new report predicts that the number of people unemployed for more than two years will rise even further over the next 12 months because there will be fewer  new vacancies and greater competition from those made redundant as a result of the government's public sector job cuts.

IPPR's report shows that long-term unemployment has historically been more of a problem for men than women but that this is changing. Currently, 20 per cent of unemployed men have been out of work for more than two years, compared to 11 per cent of unemployed women. However, IPPR's analysis suggests that the government's plans to cut employment in the public sector will affect women disproportionately. The type of flexible, well paid, part-time job favoured by many women with children is far less easy to find in the private sector. IPPR's report predicts that over the next few years, the proportion of unemployed women that have been out of work for more than two years will rise, from its current level of one in ten, compared to one in five unemployed men.

The number of younger workers, aged 18 to 24, out of work for more than two years has almost trebled since 2008, rising from just 36,000 to 95,000. IPPR's report says that young people who have experienced long-term unemployment are more likely than older people to find work again but they are likely to earn less than their peers and experience further periods of unemployment later in life.

IPPR argues that the Government needs to pursue a full employment strategy - including universal childcare - in order to reduce the deficit. IPPR also wants radical welfare reform to guarantee a minimum wage job to anyone who has been unemployed for than a year, which they would have to take or lose their benefits.

Tony Dolphin, IPPR Chief Economist, said:

"The longer someone is out of work, the more they lose motivation and confidence. They also miss out on vital training and work experience. This means that even when employment starts to pick up again, they will find it hard to compete with other jobseekers and could find themselves permanently shut out of the jobs market.

"Almost a quarter of those who have been unemployed for more than two years are over 50. The risk is that older people who have been out of work for this long stand little chance of ever working again. This means many will be forced into early retirement, which will mean a lower standard of living during their old age.

"Previously, this has mostly affected men employed in low value-added manufacturing industries that are in decline as a result of technological change and competition from emerging economies. However, the government's cuts in public sector jobs will disproportionately affect women and they too may begin to retire early.

"The longer someone is unemployed, the less likely they are to ever return to work. If we're going to provide decent services for our ageing population and clear the deficit, we need as many people in work as possible to maximise tax revenues. We cannot afford to let so many people permanently drift away from the jobs market. Ultimately, the government should be aiming to increase the employment rate not just from 70.7 per cent now back to the 73 per cent level it was at before the recession, but up towards 80 per cent."

Notes to Editors

IPPR's new report - Jobs for the future: The path back to full employment in the UK will be published at www.ippr.org

Among the recommendations in IPPR's new report are:

  • Government to provide a guaranteed job, paid at the minimum wage or above, to anyone who has been unemployed and claiming JSA for more than 12 consecutive months. The guarantee should be matched by an obligation to take up the offer or to find an alternative that does not involve claiming JSA. The job should be for no more than 30 hours a week to allow a reasonable amount of time each week for job search and should last a maximum of six months. Jobs could be provided by the third sector or local government.
  • A UK-wide scheme, along the lines of the Welsh ReACT scheme, to encourage people who are made redundant to retrain for work in other sectors and to encourage employers to recruit and train them. This scheme should last throughout the period of large-scale job cuts in the public sector, when redundancies in the whole economy are likely to be abnormally high, but should be available to workers formerly employed in the public and private sectors.
  • The Government should make the provision of better local labour market information a priority. Initially, the focus should be on JobCentre Plus, which, as part of its role, should provide job seekers with information about current and possible future trends in employment demand in their locality and surrounding areas. Eventually, this information should be made more widely available through government websites.
  • The Government should reconsider its decisions to reduce the amount of childcare support that can be claimed through the tax credit system and to integrate the childcare element of the tax credit into the Universal Credit. It should plan to introduce a single, integrated funding system for childcare that merges tax credit provision and the tax relief provided for childcare vouchers. This system should support all parents, but offer the greatest amount of support for those on low incomes.

Contacts

Richard Darlington, 07525481602, title="mailto:r.darlington@ippr.org" href="mailto:r.darlington@ippr.org">r.darlington@ippr.org

Tim Finch, 07595 920899, title="mailto:t.finch@ippr.org" href="mailto:t.finch@ippr.org">t.finch@ippr.org

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