Localism may deliver the flexibility cities need to tackle worklessness
Author: Paul SwinneyDate: 01/07/2010
Publication: New Start
The labour market performed better than expected during the recession, and at 7.9% unemployment is much lower than was generally predicted. But the relatively robust headline performance hides the rising problem of long term unemployment in cities. And tackling this problem will be a key task for the new Government.
Headline unemployment has not risen as much as feared over the last two years. Despite the severity of the downturn, many fewer people have been made unemployed than expected, and the labour market appears to have stabilised in recent months. The UK has also performed favourably to other countries; unemployment is much lower here than it is in the USA (9.7%) or in the Eurozone (10.1%).
On the surface this looks like good news. But breaking unemployment down by duration reveals a more worrying story. Whereas the number of people unemployed for less than six months is now lower in the UK than it was in September 2008, the number of people unemployed for more than one year has continued to rise. It now stands at around 750,000 people, which roughly equates to the total workforce of Birmingham.
And this trend is replicated across many of the UK’s cities. For example, Manchester has seen a steady fall in the number of short term jobseekers over the last year. But its number of long term claimants has tripled since January 2009. Claimant count figures for May 2010 reveal that over 10,000 people have been claiming jobseekers allowance for over one year. A similar, but less extreme picture is seen in Leeds. Its number of long term claimants has close to doubled.
Cities such as Sheffield and Newcastle also follow a similar pattern. Around 4,700 people have now been claiming job seekers allowance for more than a year in Sheffield, up from 1,300 in January 2009. The rise of Newcastle’s number of long term unemployed is less dramatic, and has improved slightly in recent months. But both cities may suffer from a second wave of unemployment as a result of future public sector job cuts.
Many studies show the negative impact of long term unemployment on future employment and earnings prospects. The chances of being long term unemployed falls disproportionately on the young; almost one in three long term claimants in Sheffield and Manchester is under the age of 24. So a policy response is required to limit the impact of long term unemployment.
The new Government’s approach to addressing unemployment is as yet unclear. It has scrapped the Future Jobs Fund, a policy aimed at creating jobs for long term unemployed young people. This isn’t necessarily a step backward – a report released by the Centre for Cities last year showed that the Future Jobs Fund was only a ‘sticking plaster’ rather than a long term policy response. But it is yet to announce detail on its own offer to reduce long term unemployment.
The Government’s greater focus on localism could play a role in tackling this problem. Cities need to address structural weaknesses in their labour markets. And the more specialist knowledge of the Local Enterprise Partnerships (voluntary partnerships between neighbouring local authorities) could help deliver more tailored programmes to get people back to work. But there is no blueprint for LEPs, and it will be up to cities to seek powers to address their issues.
Greater Manchester has already taken a lead on this; it was recently reported to be planning to ask DWP for commissioning powers under the new Work Programme.
The new world of localism could mean new opportunities for cities to take the initiative and to tackle worklessness.
This article first appeared in New Start.
