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Unfinished Business: securing full employment

in the UKOwen Smith MP

Paul Gregg, University of BathLaura Gardiner, Resolution Foundation

Neil Carberry,CBIDavid Willetts, Resolution Foundation@resfoundation // #fullemployment

Wifi: 2QAG-guest p: W3lc0m3!!

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The road to full employment

What the journey looks like and how to make progress

Paul Gregg & Laura GardinerMarch 2016

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THE IMPORTANCE OF FULL

EMPLOYMENT

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Recent strong employment growth has put full employment back on the agenda

UK employment and unemployment

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Those not in work are strongly concentrated at the bottom of the income distribution

Workless adults as a share of all adults in each quintile of the 16-69 year old equivalised net household income distribution

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Employment has driven living standards for lower-income households since the crisis

Employment rates by decile of the 16-69 year old equivalised net household income distribution

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Full employment is key to future living standards, and other economic concerns• Working age benefits and tax credits are declining

in value and the outlook for wages is uncertain – expectations that inequality will increase in coming years

• Further improvements in employment for workless adults in the UK – who are concentrated in the bottom half of the income distribution – is the key offsetting factor

• Full employment can also deliver higher wages for low earners, and rising national income due to an expanded labour force

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DEFINING AND QUANTIFYING FULL

EMPLOYMENT

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A ‘bottom up’ approach rooted in the UK experience, built upon three key insights:1. Outside of downturns, most jobs growth comes from increased

participation (not lower unemployment)

Quarterly employment entrants by status in previous quarter (16+ year olds, thousands)

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A ‘bottom up’ approach rooted in the UK experience, built upon three key insights:1. Outside of downturns, most jobs growth comes from increased

participation (not lower unemployment)2. ‘Low activity’ groups tend to have lower participation rates than

the average…

Participation rates for groups with different characteristics (18-69 year olds)

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A ‘bottom up’ approach rooted in the UK experience, built upon three key insights:1. Outside of downturns, most jobs growth comes from increased

participation (not lower unemployment)2. ‘Low activity’ groups tend to have lower participation rates than

the average…3. … With substantial variation across different parts of the

countryParticipation rates for groups with different characteristics in 20 UK sub-regions (18-69 year olds)

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A ‘bottom up’ approach rooted in the UK experience, built upon three key insights:1. Outside of downturns, most jobs growth comes from increased

participation (not lower unemployment)2. ‘Low activity’ groups tend to have lower participation rates than

the average…3. … With substantial variation across different parts of the

countryOur approach to benchmarking full

employment:

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Full employment by the end of the parliament

• An increase in the 16-64 year old employment rate to 78 per cent by 2020-21 – an additional 2 million people in work relative to today – The majority of the employment increase (75 per

cent) comes from rising participation– Those in low activity groups experience large

increases in their employment rates, particularly disabled people, the low-qualified and BAME groups

– The lowest-performing parts of the country experience the greatest employment gains, with a 10 ppt+ increase in Merseyside and the rural North East

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HOW TO GET TO FULL EMPLOYMENT

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A need for new policy thinking

• Policy headwinds – including the National Living Wage and the Apprenticeship Levy – mean further employment growth is by no means a given

• Demand itself is not enough – it needs to be concentrated in lower-employment parts of the country

• And even when in the right places, employment demand won’t get us all the way there automatically

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A post-crisis approach to full employment

• A broad focus on raising participation, and not just unemployment or benefit receipt

• A new emphasis on reducing (or delaying) employment exits

• A recognition that location is of central importance, both in terms of shaping policy interventions to local need, and in the need to deliver regionally-shared employment demand

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A new policy agenda for achieving full employment

By minimising employment exit

And by maximising entry to employment

Mothers and single parents The low-qualifiedDisabled people Young people

Older people BAME groups

An overarching framework for boosting employment across the country

A policy agenda aligned to the challenges faced by different 'low activity' groups

Policies to boost employment across 'low activity' groups

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A new policy agenda for achieving full employment

By minimising employment exit

And by maximising entry to employment

Mothers and single parents The low-qualifiedDisabled people Young people

Older people BAME groups

An overarching framework for boosting employment across the country

A policy agenda aligned to the challenges faced by different 'low activity' groups

Policies to boost employment across 'low activity' groups

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A new policy agenda for achieving full employment

By minimising employment exit

And by maximising entry to employment

Mothers and single parents The low-qualifiedDisabled people Young people

Older people BAME groups

An overarching framework for boosting employment across the country

A policy agenda aligned to the challenges faced by different 'low activity' groups

Policies to boost employment across 'low activity' groups

Disabled peopleThe government must use its forthcoming disability employment White Paper to establish a comprehensive strategy not just for boosting employment entry but for minimising employment exit connected to disability and ill-health

• A disability employment outflow reduction target

• A statutory 'right to return' of a year

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A new policy agenda for achieving full employment

By minimising employment exit

And by maximising entry to employment

Mothers and single parents The low-qualifiedDisabled people Young people

Older people BAME groups

An overarching framework for boosting employment across the country

A policy agenda aligned to the challenges faced by different 'low activity' groups

Policies to boost employment across 'low activity' groups

The low-qualifiedThe government must use the opportunity provided by the Apprenticeship Levy to ensure that apprenticeships and traineeships are more appropriately targeted towards those transitioning from study, unemployment and inactivity into work

• Target of half of all new apprenticeships and traineeships allocated to those coming from study or who have been out of work

• An apprenticeship access fund

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A new policy agenda for achieving full employment

By minimising employment exit

And by maximising entry to employment

Mothers and single parents The low-qualifiedDisabled people Young people

Older people BAME groups

An overarching framework for boosting employment across the country

A policy agenda aligned to the challenges faced by different 'low activity' groups

Policies to boost employment across 'low activity' groups

Policies to boost employment across ‘low activity’ groupsThe government must extend employment support services beyond those engaged with the benefit system to provide assistance to wider workless populations

• Local 'public employment services' incorporating Jobcentre Plus and other advice and support

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Full employment as a destination worth targeting: concluding remarks• Our ‘bottom up’ analysis puts meat on the

bones of full employment ambitions, showing the scale of the challenge, and which groups and areas to target

• Recent employment performance gives us grounds for hope, but not complacency – an active policy focus is required– To support the economic conditions conducive to low

activity participation in low-employment areas– To address the particular employment barriers and

challenges faced by low activity groups

• Full employment is the key tool for achieving inclusive prosperity

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Unfinished Business: securing full employment

in the UKOwen Smith MP

Paul Gregg, University of BathLaura Gardiner, Resolution Foundation

Neil Carberry,CBIDavid Willetts, Resolution Foundation@resfoundation // #fullemployment

Wifi: 2QAG-guest p: W3lc0m3!!