FULL EMPLOYMENT MODELLING THE IMPACT ON PUBLIC FINANCES
BRITAIN NEEDS TO IMPROVE PEOPLE S CHANCES OF FINDING A JOB AND TACKLE THE BARRIERS TO GAINING WORK
REMOVE BARRIERS TO WORK FOR... WOMEN OLDER WORKERS DISABLED WORKERS 10 % INCREASE IN FEMALE EMPLOYMENT NATIONAL INSURANCE 2.1bn INCOME TAX 1.7bn UK REGIONS INCREASING EMPLOYMENT RATES IN LDN, DEVOLVED NATIONS, MIDLANDS AND THE NORTH TO 72% WOULD RAISE EQUAL TO HALF DWP BUDGET INCREASING THE EMPLOYMENT RATE OF OLDER WORKERS MINSTRY OF JUSTICE DPT BUDGET BAME POPULATION 2013 EMPLOYMENT RATE 60% BAME POPULATION OF UK BOOST TO 65% AVERAGE EMPLOYMENT RATE OF WHITE PEOPLE 13 % BY +1M WOULD RAISE EQUAL TO HIGHER THAN THE REST OF THE POPULATION EQUAL OPPORTUNITY TO WORK, EMPLOYMENT RATE OF PEOPLE WITH A DISABILITY IS MUCH LOWER THAN THE EMPLOYMENT RATE OF THE TOTAL POPULATION IMPACT ON THE PUBLIC FINANCES LOW OR NO QUALIFICATIONS 0.6bn INCOME TAX EMPLOYMENT RATES OF PEOPLE WITH LOW OR NO QUALIFICATION 0.9bn NATIONAL INSURANCE
THERE ARE MANY BENEFITS ASSOCIATED WITH A HIGH EMPLOYMENT RATE, BOTH FOR THE INDIVIDUAL AND THE ECONOMY. THIS ANALYSIS ESTIMATES THE IMPACT ON THE PUBLIC FINANCES OF RAISING THE EMPLOYMENT RATES OF TRADITIONALLY UNDER-REPRESENTED GROUPS IN THE LABOUR MARKET.
FEMALE WORKERS 2013 MALE EMPLOYMENT RATE 2013 FEMALE EMPLOYMENT RATE GENDER EMPLOYMENT GAP 10% THE UK S FEMALE EMPLOYMENT RATE LAGS BEHIND A NUMBER OF INDUSTRIALISED ECONOMIES 74% AVERAGE EMPLOYMENT RATE OF THE 5 BEST PERFORMING OECD COUNTRIES
WHAT IS THE IMPACT ON THE PUBLIC FINANCES IF MORE WOMEN WERE IN WORK? 10 % INCREASE IN FEMALE =1,300,000 EMPLOYMENT MORE WOMEN IN PAID WORK IN 2013-14 THIS WOULD HAVE RAISED... 1.7bn INCOME TAX 2.1bn NATIONAL INSURANCE = HALF THE DFID BUDGET
INCREASING FEMALE EMPLOYMENT BY 10% WOULD ALSO MEAN SAVINGS 3.2bn MEANS-TESTED BENEFITS 0.4bn NON MEANS-TESTED BENEFITS 0.9bn NON-CONTRIBUTORY JSA 1bn HOUSING BENEFIT CONTRIBUTORY JSA RETIREMENT PENSION INCAPACITY BENEFIT CHILD BENEFIT PENSIONS CREDIT NON-CONTRIB. JSA INCOME SUPPORT HOUSING BENEFIT COUNCIL TAX BENEFIT 0 200 400 600 800 1000
WOMEN: POLICY DIRECTIONS TO SUPPORT HIGHER FEMALE EMPLOYMENT RATES IT IS IMPORTANT TO UNDERSTAND SOME OF THE BARRIERS THAT WOMEN EXPERIENCE IN ENTERING OR RE-ENTERING WORK THE GENDER GAP IS LARGELY EXPLAINED BY LOW MATERNAL EMPLOYMENT RATES, ROUGHLY 90 PER CENT OF THE GAP IN THE UK IS EXPLAINED BY THE LOW MATERNAL EMPLOYMENT RATES WOMEN REMAIN PRIMARY CARERS - TAKING CARE OF NOT ONLY CHILDREN, BUT PARTNERS, AND RELATIVES. FOR EXAMPLE 17 PER CENT OF UNEMPLOYED OLDER WOMEN LEFT WORK TO CARE POLICY AND BUSINESS CAN HELP TO REDUCE THESE STRUCTURAL CONSTRAINTS, AND MAKE WORK A FEASIBLE OPTION BY PROVIDING AFFORDABLE CHILDCARE, BETTER QUALITY PART-TIME WORK, AND FLEXIBLE WORK ENABLING WOMEN TO BETTER COMBINE CARE AND WORK
OLDER WORKERS 15 % INCREASE IN EMPLOYMENT OF OLDER WORKERS =1,200,000 MORE OLDER WORKERS IN PAID WORK AN INCREASE OF OVER 1m OLDER WORKERS IN THE LABOUR MARKET = IN 2013-14 THIS WOULD HAVE RAISED... 2.0bn INCOME TAX 1.3bn = NATIONAL INSURANCE HALF THE MINSTRY OF JUSTICE DPT BUDGET
INCREASING THE EMPLOYMENT OF OLDER WORKERS BY 15% WOULD ALSO MEAN SAVINGS 1.8bn MEANS-TESTED BENEFITS 0.3bn NON-CONTRIBUTORY JSA 0 100 200 300 400 0.4bn PENSION CREDIT 0.2bn RETIREMENT PENSION CONTRIBUTORY JSA SEVERE DISABLEMENT ALLOWANCE RETIREMENT PENSION INCAPACITY BENEFIT CHILD BENEFIT CARERS ALLOWANCE BEREAVEMENT BENEFITS PENSIONS CREDIT NON-CONTRIB. JSA INCOME SUPPORT HOUSING BENEFIT COUNCIL TAX BENEFIT
OLDER PEOPLE: POLICY DIRECTIONS TO INCREASE EMPLOYMENT RATES FURTHER, POLICYMAKERS NEED TO CONSIDER THE BARRIERS TO REMAINING IN WORK TO SMOOTH THE TRANSITION BACK TO WORK BUSINESSES NEED TO IMPROVE ATTITUDES TO OLDER WORKERS, IMPROVING BOTH RECRUITMENT AND RETENTION, THIS WILL INVOLVE TACKLING DISCRIMINATION, BETTER ACCOMMODATING PEOPLE WITH LONG-TERM HEALTH CONDITIONS, AND THINKING MORE CAREFULLY ABOUT JOB DESIGN SUCH AS OFFERING OPPORTUNITIES TO DOWNSHIFT. FOR MANY OLDER UNEMPLOYED PEOPLE FLEXIBILITY IS VITAL TO FINDING WORK, SOME WORKERS DO NOT RETURN TO WORK BECAUSE THEY CANNOT FIND THE RIGHT FLEXIBILITY: AMONG UNEMPLOYED WORKERS 37 PER CENT OF MEN AND 50 PER CENT OF WOMEN NEED FLEXIBLE WORKING HOURS TO ENABLE THEIR TRANSITION BACK TO WORK. SOME OLDER WOMEN LEAVE WORK TO CARE (17 PER CENT OF UNEMPLOYED OLDER WOMEN), REVEALING THE LACK OF APPROPRIATE LEAVE, SUCH AS CARE LEAVE, AVAILABLE TO COMBINE OTHER RESPONSIBILITIES WITH WORK
EQUAL OPPORTUNITY TO WORK MORE NEEDS TO BE DONE TO ENSURE EQUAL ACCESS INTO PAID WORK. EQUAL OPPORTUNITY TO WORK, EMPLOYMENT RATE OF PEOPLE WITH A DISABILITY IS MUCH LOWER THAN THE EMPLOYMENT RATE OF THE TOTAL POPULATION
INCREASE THE NUMBER OF DISABLED PEOPLE IN WORK BY 0.5m IN 2013-14 THIS WOULD HAVE RAISED... = 0.6bn INCOME TAX 0.7bn NATIONAL INSURANCE INCREASING THE NUMBER OF DISABLED PEOPLE IN WORK WOULD MEAN INCREASE OF 0.6bn WORKING TAX CREDIT BUT A FALL OF... 0.06bn CHILD TAX CREDIT
INCREASING THE NUMBER OF DISABLED PEOPLE IN WORK BY HALF A MILLION 1.8bn MEANS-TESTED BENEFITS 0.3bn NON-MEANS TESTED BENEFITS 0.9bn INCOME SUPPORT 0.5bn HOUSING BENEFIT CONTRIBUTORY JSA RETIREMENT PENSION INCAPACITY BENEFIT CARERS ALLOWANCE PENSIONS CREDIT NON-CONTRIB. JSA INCOME SUPPORT HOUSING BENEFIT COUNCIL TAX BENEFIT 0 200 400 600 800
DISABLED WORKERS: POLICY DIRECTIONS STRUCTURAL LABOUR MARKET DISADVANTAGES PENALIZE MANY DISABLED PEOPLE, MAKING IT PARTICULARLY DIFFICULT TO FIND A JOB IN THE CURRENT LABOUR MARKET AT PRESENT, BACK TO WORK SUPPORT FOR DISABLED PEOPLE IN BRITAIN IS NOT TAILORED ENOUGH TO EXISTING NEEDS. INSTEAD IT LARGELY ADOPTS EXISTING ACTIVE LABOUR MARKET POLICY BASED ON THE NEEDS OF MAINSTREAM JOBSEEKERS ACTIVE LABOUR MARKET POLICIES THAT WILL SUPPORT TRANSITION INTO WORK WILL NEED TO CONSIDER THE DISTINCT ISSUES FOR THOSE WITH HEALTH CONDITIONS AND DISABILITIES THE BALANCE OF PUBLIC SPENDING ON DISABILITY RELATED BENEFITS SHOULD SHIFT AWAY FROM PASSIVE CASH BENEFITS FOR PEOPLE TOWARDS MORE PRODUCTIVE INVESTMENT THAT PROMOTES HIGHER EMPLOYMENT RATES DISCRIMINATION, ALBEIT NOT ALWAYS BLATANT OR INTENTIONAL, STILL REMAINS PERSISTENT IN HIRING ATTITUDES AND THE BEHAVIOUR OF EMPLOYERS, POSING SIGNIFICANT BARRIERS TO DISABLED JOBSEEKERS THIS NEEDS TO BE ADDRESSED
IMPROVING REGIONAL EMPLOYMENT RATES EMPLOYMENT RATES ACROSS REGIONS VARY... 67% 76% = = A LOW EMPLOYMENT RATE IN LONDON A HIGH EMPLOYMENT RATE IN EAST & SOUTH EAST HOW THE REGIONS ARE SPLIT: EAST AND SOUTH EAST OF ENGLAND: EASTERN, SOUTH EAST OF ENGLAND LONDON DEVOLVED NATIONS: NORTHERN IRELAND, WALES, SCOTLAND MIDLANDS: EAST MIDLANDS, WEST MIDLANDS NORTH: NORTH EAST, NORTH WEST AND MERSEYSIDE, YORKSHIRE AND HUMBERSIDE SOUTH WEST OF ENGLAND
72% EMPLOYMENT RATE IN UK AT THE END OF 2013 AN INCREASE TO 72% IN EMPLOYMENT = 600,000 RATES IN LONDON, THE DEVOLVED NATIONS, MIDLANDS AND THE NORTH MORE PEOPLE IN PAID WORK IN 2013-14 THIS WOULD HAVE RAISED... 1.3bn INCOME TAX = ALMOST HALF DWP BUDGET 1.8bn NATIONAL INSURANCE
INCREASING THE EMPLOYMENT RATE OF LONDON, THE DEVOLVED NATIONS, THE MIDLANDS AND THE NORTH (TO 72%) 2.2bn MEANS-TESTED BENEFITS 1bn NON-CONTRIBUTORY JSA 0.4bn NON MEANS-TESTED BENEFIT CONTRIBUTORY JSA RETIREMENT PENSION INCAPACITY BENEFIT CHILD BENEFIT CARERS ALLOWANCE PENSIONS CREDIT NON-CONTRIB. JSA INCOME SUPPORT HOUSING BENEFIT COUNCIL TAX BENEFIT 0 200 400 600 800 1000
UK REGIONS: POLICY DIRECTIONS A NUMBER OF REGIONS ACROSS THE UK HAVE LOW EMPLOYMENT RATES BECAUSE OF LONGSTANDING STRUCTURAL LABOUR MARKET PROBLEMS. GLOBALISATION HAS IN PART BEEN RESPONSIBLE FOR THE DECLINE IN EMPLOYMENT IN A NUMBER OF REGIONS - PARTICULARLY IN REGIONS WHERE LOW VALUE ADDED MANUFACTURING WAS RESPONSIBLE FOR HIRING A SIGNIFICANT SHARE OF WORKERS TO REDUCE LABOUR MARKET DISPARITIES ACROSS THE UK WILL IN PART BE A SKILLS CHALLENGE AND AN INVESTMENT CHALLENGE IMPROVING THE SKILLS BASE OF REGIONS IS IMPORTANT AS A MORE HIGHLY SKILLED WORKFORCE IS ABLE TO RESPOND FLEXIBLY TO CHANGES IN THE LOCAL LABOUR MARKET AND ADAPT MORE QUICKLY TO TECHNOLOGICAL ADVANCES GREATER ECONOMIC INVESTMENT IN KEY INFRASTRUCTURE AND EXPORT SECTORS WOULD HELP TO SUPPORT REGIONAL GROWTH, AND REGIONAL EMPLOYMENT GREATER ENGAGEMENT BETWEEN FIRMS AND SKILL AND TRAINING PROVIDERS/EDUCATION SECTOR COULD HELP TO REDUCE THE MISMATCH BETWEEN SKILLS SUPPLY AND THE DEMANDS OF LOCAL EMPLOYERS DEVOLVED FUNDING OF WORK PROGRAMME - CITY-REGIONS AND THEIR LOCAL AUTHORITY PARTNERS TAKING LEAD RESPONSIBILITY FOR LINKING UP SKILLS PROVISION, EMPLOYMENT AND ECONOMIC GROWTH IN THEIR AREAS
MORE DIVERSE WORKFORCE: IMPROVING BAME EMPLOYMENT RATES AVERAGE EMPLOYMENT RATE OF WHITE PEOPLE 13% HIGHER THAN THE REST OF THE POPULATION 2013 EMPLOYMENT RATE 60% BAME POPULATION OF UK AN INCREASE TO 72% IN THE EMPLOYMENT RATES = 620,000 OF BAME POPULATION WOULD IN 2013-14 THIS WOULD HAVE RAISED... 0.9bn 1.2bn INCOME TAX NATIONAL INSURANCE MORE WORKERS IN THE LABOUR MARKET = ALMOST HALF THE TRANSPORTATION BUDGET
INCREASING THE BAME EMPLOYMENT RATE TO 72% WOULD MEAN SAVINGS 1.3bn MEANS-TESTED BENEFITS 0.5bn NON-CONTRIBUTORY JSA 0.1bn NON MEANS-TESTED BENEFITS CONTRIBUTORY JSA RETIREMENT PENSION INCAPACITY BENEFIT CARERS ALLOWANCE PENSIONS CREDIT NON-CONTRIB. JSA INCOME SUPPORT HOUSING BENEFIT COUNCIL TAX BENEFIT 0 100 200 300 400 500
BAME POPULATION: POLICY DIRECTIONS THERE EXISTS AN EMPLOYMENT GAP BETWEEN ALL ETHNIC MINORITIES GROUPS AND THEIR WHITE COUNTERPARTS MORE NEEDS TO BE DONE TO ENSURE A DIVERSE WORKFORCE REFLECTS LOCAL COMMUNITIES ASIDE FROM PROGRESSION ROUTES, POLICY SHOULD FOCUS ON RECRUITMENT INNOVATIVE SOLUTIONS COULD INCLUDE: RUNNING PRE-APPLICATION EVENTS, OR PRE-EMPLOYMENT PROGRAMMES, RUNNING APPRENTICESHIPS TARGETED AT BAME POPULATION TO PROVIDE STRONGER PATHWAYS INTO WORK, DELIVERING TRAINING SESSIONS WITHIN FIRMS TO HELP TACKLE CONSCIOUS AND UNCONSCIOUS BIAS IMPROVING MONITORING OF DIVERSITY WITHIN ORGANISATIONS TO BETTER UNDERSTAND BARRIERS AND CHALLENGES COULD HELP ADDRESS UNDERREPRESENTATION OF MINORITIES IN PARTICULAR OCCUPATIONS AND SECTORS THE WORK PROGRAMME SOULD BE REFORMED TO BECOME MORE RESPONSIVE TO THE CHALLENGES FACING ETHNIC MINORITIES THE PROGRAMME SHOULD ALSO ALLOW INDIVIDUALS TO VOICE CONCERNS RELATED TO RACE FREE FROM JUDGEMENT
SKILLS CHALLENGE: IMPROVING EMPLOYMENT RATES OF PEOPLE WITH LOW OR NO QUALIFICATIONS SKILLS ARE AN IMPORTANT DETERMINANT OF EMPLOYMENT OUTCOMES. THOSE WITH LOW SKILLS FIND IT PARTICULARLY HARD TO FIND A JOB. PART OF ANY FULL EMPLOYMENT STRATEGY WOULD BE TO MAKE BETTER USE OF EXISTING SKILLS WITHIN THE WORKFORCE. THIS WOULD BE ALONGSIDE IMPROVING THE SKILLS OF THE EXISTING POPULATION TO IMPROVE THEIR EMPLOYMENT OUTCOMES. BOOST TO 65% EMPLOYMENT RATES OF PEOPLE WITH LOW OR NO QUALIFICATION = 150,000 MORE WORKERS IN THE LABOUR MARKET IN 2013-14 THIS WOULD HAVE RAISED... MORE THAN THE DECC BUDGET 0.7bn 0.9bn INCOME TAX NATIONAL INSURANCE=
INCREASING THE EMPLOYMENT RATE OF THOSE WITH LOW OR NO QUALIFICATIONS TO 65% WOULD MEAN SAVINGS 1.5bn MEANS-TESTED BENEFITS 0.7bn NON-CONTRIBUTORY JSA 0.3bn NON MEANS-TESTED BENEFITS CONTRIBUTORY JSA RETIREMENT PENSION INCAPACITY BENEFIT PENSIONS CREDIT NON-CONTRIB. JSA INCOME SUPPORT HOUSING BENEFIT COUNCIL TAX BENEFIT 0 100 200 300 400 500 600 700 800
LOW SKILL/ NO QUALIFICATIONS: POLICY DIRECTIONS SKILLS ARE CENTRAL IN DETERMINING EMPLOYMENT OUTCOMES, EMPLOYMENT RATES ARE PARTICULARLY LOW AMONG ADULTS WITH NO QUALIFICATIONS COMPARED TO THOSE WITH JUST LOW-LEVEL (LEVEL 2) QUALIFICATIONS. ENSURING A STRONG SKILLS BASE WILL IMPROVE PUBLIC FINANCES, IMPROVE LABOUR MARKET PROSPECTS AND HELP TO BUFFER THE ECONOMY AGAINST FUTURE CRISES ADDRESSING THE SKILLS CHALLENGE WILL INCLUDE OFFERING OPPORTUNITIES FOR UP- AND RE-SKILLING WORKERS THIS WILL BE CRUCIAL FOR WORKERS IN DECLINING INDUSTRIES, AND THE LONG-TERM UNEMPLOYED THERE ALSO NEEDS TO BE BETTER EXCHANGE OF INFORMATION BETWEEN FIRMS AND THE EDUCATION AND TRAINING SYSTEM TO ENSURE BETTER SKILLS MATCH BETWEEN THE EMPLOYER DEMAND FOR SKILLS AND SKILLS SUPPLY
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