Press Story

Clare McNeil, IPPR Associate Director for Work and Families, responding to this morning’s employment statistics, said:

“Today’s job figures show that the macroeconomic employment data continued to strengthen this Spring. However, as we saw in the IFS’s detailed analysis of developments in living standards and inequality, released yesterday, weekly earnings have plateaued at lower levels in the years following the 2009 recession, while the growth in earnings among those on lower incomes is primarily the result of people working more hours, rather than any rise in wages.

“The effect on the labour market of the UK’s decision to leave the EU won’t be reflected in the data for another few months, but the Brexit vote is likely to have a negative impact, as firms scale back their hiring plans, or shed workers as demand slows. Some estimates suggest unemployment could rise by up to 450,000 in the short term as a result.

“Damian Green must act quickly to limit this potential damage to the labour market. Two things will be key. Firstly, learning lessons from the last recession. Government must do more than last time round to anticipate and response to large scale job losses, including making redundancy retraining widely available for affected workers.

“Secondly he will also need to decide whether the new programme DWP is introducing to support the long term unemployed is equipped to cope in the event of higher unemployment. The ‘Work and Health programme’ was designed for a buoyant jobs market, and is a budget version of its predecessor. It also stands to lose vital EU funding after 2018. With trials of the new programme due to start shortly, now is the time to move to a more flexible design and start lobbying the Treasury for more funding for both these priorities at the next Autumn Statement.

“All of this must be done while seeing through the largest reform to working age benefits in a generation, delivering the government's life chances agenda and preparing the UK’s labour market for less reliance on EU migrant workers. This is a tough brief, no doubt, and one which is perhaps the biggest test of the bold commitments Theresa May made to change Britain last week”

Ends

Editor’s notes:

1. More information on the Work and Health programme is here, [https://www.gov.uk/government/news/department-for-work-and-pensions-settlement-at-the-spending-review].

2. UK Labour Market: July 2016, ONS, [http://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/july2016]

Contact

Kieren Walters, Head of News, k.walters@ippr.org 07921 403651