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Unemployment in the UK: An Analysis

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Published: Mon, 11 Dec 2017

Introduction

Unemployment is one of the growing problems in the western nations currently. UK too suffers from the very same persisting problems existing in multiple strata of the society. Even holding a respectable degree is often not an assurance towards obtaining a secured job. Such ill-happening in a way destroys the society and further spreads its roots into the whole economy. There are multiple reasons which work behind causing unemployment in the society. The assignment would strive to explore these factors and analyze them deeply in order to understand them better.

Changing Trends of Unemployment in the United Kingdom

In this huge commercial market of changing trends, technology and working styles, the output being expected is even varying, bringing a subsequent change in the skill, organisational structure and practices required. And to cope up with these changes in the demand and supply, the quality and quantity of workforce that needs to be employed is also changing. In order to bring into limelight this new and completely transformed sphere of work and market and demonstrate a clearer view of the newly perceived leadership, the world’s foremost employment agency, Manpower, is seeking to contribute to the analysis and interpretation of these issues (Fox, Albertson, Ellison & Martin, 2011). Manpower is the world leader in employment service industry and offers its clients ample services for the complete employment and business cycle.

So as to achieve success in this field, Manpower is joining hands with Europe’s leading centre of applied economic research, the Centre of Economic Performance (CEP), whose fundamental goal is to understand and analyse economic performance and publish the changing policies and practices after carrying out outstanding scientific research on some key issues like education, technology, globalisation, labour market, etc. It is the largest social science research centre in the United Kingdom and is funded by UK’s Economic and Social Research Council (Darling, 1992). It was because of their remarkable research quality and its impact on public policy, it was honoured by the Queen’s Prize for Education in 2003. These two well established firms have come together to launch Manpower Human Resources Lab, a research lab at the London School Of Economics, which strives to be the leading centre of study of the impacts of human resource decision and labour market trends on the productivity of the firm at national as well as international levels.

The Human Resources Lab’s first aim is to observe the changes taking places in the areas of skill development, lifelong learning, flexibility being offered by the administration in various terms and the changing labour market. All these observation will be transported via systematic industrial briefing, and would be deeply studied so as to develop the clearer picture of the changing needs and characteristics of the present workforce and also to boost the growth and competitiveness. The research is going to be carried out at two different levels i.e. firm-level and workplace-level. These different research levels would raise the standards of the data being collected and give provide a deeper insight to the present day scenario. All this data will be then investigated by CEP, which specialises in the analysis of the larges-scale microeconomic data (Livanos, Yalkin & Nuñez, 2009). This analysis will try to answer many questions, like the adoption, maintenance and demise of a particular practice, the outcomes of the interest, consistency of the relationships in one country and its comparison with the data of other countries. The answers to all these questions will involve taking in consideration different types of data such as workplace oriented data, international comparative data, large-scale quantitative data and longitudinal data.

In this changing world, the way the humans/workforce is evolving has deep effect on this issue of unemployment. The past needs to be thought upon and studied deeply in order to make final judgments and policies for the future. The way workforce responds to the market is of crucial importance and also determines the performance of the economies.

Confronting unemployment:

With the growing population and changes in the demands and supply, the unemployment problem has swelled up hugely and has now become one big concern of the society. All of this can also be contributed to this era of changing technologies. CEP researchers enlightened this issue of unemployment by bringing forth the Layard-Nickell model (Layard et al, 1991, 2005). This research put forward of the reasons of unemployment in the short time span as well as the medium time span. In the short run, unemployment was ruled upon by the aggregate demand whereas in the medium run, it was the institutional limits to the level of demand required. The fallouts of this analysis were that the efforts should be levelled up from the supply side and a separate mechanism to regulate the demand should be brought into force. Also, two misconceptions cleared, they are that unemployment remains unaffected by the bigger labour force and hence immigration should not be accused for the rising unemployment. Secondly, improved technology as absolutely no links with unemployment, it just lends a helping hand in higher productivity.

CEP had brought into notice the level of vacancies which was one of its biggest contributions to the understanding of unemployment. Particularly in UK, the number of vacancies had been levelled from the year 1975 to 1985 but astonishingly the unemployment increased three fold. It was this “mobilisation failure” that wasn’t handled properly and resulted higher inflation in the country (Potts, 1999). The reasons behind this were the treatment and benefits being offered to the workforce in their offices and workplaces. This observation led to many changes in the way the administration worked and focus was given on enhancing measures related to “welfare-to-work”.

Based on all these observations and analysis, the team had proposed some relevant strategies to cope up the trends of unemployment. So as to avoid long-term unemployment there should be some ‘active-labour policies’ to ensure that the time span of being unemployed of any person is not able to exceed a year and he/she should be offered a job opportunity before that. Factors such as uncontrolled access to invalidity pensions and early-retirement should also be now restrained so as to avoid implementing high cost early retirement for older workers (Kiely & Blyton, 1990).

Simultaneously, another great personality was working on the finer threads of the processes of job search and job matching which would also give an idea about the flow of people in and out of the employment and unemployment sectors. His working was mainly theoretical and had the concept of “matching functions” which would different heads like job creation, number of unemployed people, vacancies and the magnitude with which the workers search and the company recruits.

Rise in Labour Market Dormancy:

The present state of UK market is quiet encouraging as it has high proportions of the people employed as compared to the Big Four countries of the continental Europe- namely France, Germany, Italy and Spain, which still have high proportions of unemployed labour. This milestone in high proportions of employment has mainly been achieved by the proper and honest implementation of policy proposals given out after CEP’s deep research (McGough & Tsolacos, 1995). But the story doesn’t end here, despite the tackled employment ratio; one new problem has also emerged: dormancy of the labour, wherein a huge mob of people in the working age are neither employed nor making efforts in looking for any job. The recent surveys release that about 2.7 million people of working age are enjoying the benefits in the name of incapability.

CEP’s two researchers have shown that the UK’s inactivity rate for the working age group has escalated four-fold since the mid 1970’s. The age group of prime aged men i.e. 25 to 54, the dormancy rate in now 8.4% which is believed to be five times higher than in the mid 1970’s. These astonishing changes have been mainly brought about by the technological changes which favour people which are smooth with computer use and other gadgets and machinery. Globalisation has been losing its relevance because of the changing trends. These are the main factors that have brought about sudden repulsion for unskilled and unqualified labour. Richard Layard, another researcher of the CEP, had found some work points on another policy option (Weber, 2002). He states that there are a high percentage of mentally ill people on incapability benefits than the total number of unemployed labour. His survey depicted that one in every six people suffered from either depression or chronic anxiety. And, unfortunately only a quarter of them are being able to receive proper treatment regarding their problems.

Completely Unemployed Families:

A research that happened in the late 1990’s found out that half of the single mother in UK were unemployed and were also not successful in finding out any workplace for them. , CEP was active throughout the 1990s in examining schemes to ‘make work pay’ – including the Working Families Tax Credit, the New Deal and the National Minimum Wage. These continuous efforts were made so as to lift up the economic conditions of the people and help them come out of poverty. CEP had also done various surveys to check the effectiveness of the policies being put forth by the researchers (Berument, Dogan & Tansel, 2006).

Minimum Wages:

A policy, namely, National Minimum Wages had been put forth by the researchers of CEP and was introduced nationally for the very first time in UK in the year 1999. This policy was a milestone in terms of the progress being achieved under employing the maximum possible labour and had proven to be the most significant labour market intervention since 1997. Although prior to the introduction of this policy, people had shown repulsiveness for it and stated that it would not only cause destruction to about two million jobs but it would also raise the inflation and interest rates as the difference in pays of the people working at various levels would be highly minimized (Frambach, 2005). Fortunately, none of these accusations had materialised. CEP’s main work on the minimum wages was to raise the pay of approximately one million low-paid workers by about 15% overnight from the very point of its introduction. The graphs show that since 1999 the minimum wages have been risen by about 30% after certain adjustments in the various fields. One another applaud able thing about this policy is that its working has been defined in such a way that it tends to close the gender wage gap, as women have been benefited more by it in comparison to men.Research by the CEP and overseas firms have yet not found any significant evidence of negative employment effects of the minimum wages policy.

The quality of output required can only be satisfied if the workforce employed has been trained well in their respective fields. The educational background and the past experiences play an important role in defining the kind of job the individual can carry out with perfection (Barrell, 1993). Centre for Economics and Education (CEE) based at CEP, is led by Stephen Machin and it explores the various stages of education in order to perceive how the education production is being altered, spread of awareness regarding education and its economic impact on an individual, firm as well as on the society as a whole.

School Effectiveness:

Comparisons in between the different countries in terms of the basic skills has shown that the UK population has rather poorer basic skill development resources as compared to others.In the 1980s, the government countered by introducing a standardised National Curriculum for all students aged 7-16, aiming to guarantee that all scholars studied a minimum depth and breadth of curriculum. Later in 1990’s an innovation in the policy was introduced that prescribed that the scholars should be taught literacy and numeracy for least an hour every day (Livanos, Yalkin & Nuñez, 2009). The effects of the implantation of all these policies is that the number of school teachers has raised by 12,000 since the year 2001 but simultaneously the class sizes have fallen.Now approximately nine in ten primary scholars are taught in a class which has a strength of not more than 30 pupils as compared with seven in ten in year1997.

Higher Education:

Even though higher education has always received high esteem even in the historical time but there has been subsequent rise in the participation of the pupils in the recent decades itself. The policies have been trying ever since to expand the roots further in the hope of widening access to the previously under-represented groups. But this expansion calls for a rise in the tuition fees which can subsequently affect the participation and interest of higher education among the poorer groups. Also educational inequality has increased: young people from the poorest income groups have increased their graduation rate by just 3% between 1981 and the late 1990s, compared to the rise in graduation rates of 26% for those with the richest 20% of parents (Fox, Albertson, Ellison & Martin, 2011). The clear conclusions of these surveys are that only the higher/richer class is being benefitted to the fullest by these policies whereas the poorer class still remains in the background and hasn’t evolved much by these policies.

These inequalities now question whether there is a justified need of graduates and can an investment in post-secondary degree yield significant returns. Through the surveys it has been observed that despite the speedy increase in the supply of graduates, facilitated by the expansion of higher education, the wage differences between the two have yet not fallen in the period of time. It isn’t only up to the labour quality and quantity that the trends of unemployment have been altered so hugely. The kind of environment being offered by the administration/firm, the benefits being provided, macroeconomic environment, workplace organisation etc. are also impactful contributing factors in this issue. CEP’s Stephen Nickell published a ground-breaking study, which exhibited that increasing the intensity of product market competition raises innovation and productivity (Weber, 2002). It is important factor to be taken into consideration is that the popular discussions of the corporate world tend to place enormous stress on the relevance of proper and systematic management in the top performing offices. But, the facts have yet not been established regarding this topic as the quality data isn’t available due to the absence of proper and systematic researches across the country.

CEP research has discovered the impact of investment in new information and communications technologies (ICT) on the productivity of UK commerce. The study was conducted cooperatively with the Office for National Statistics that showed, ICT does enhance productivity hugely, but the key influence is still of the organization and management of the system. The facts are that the US establishments settled in UK have been spending a lot more upon their Information and Communication Technologies (Frambach, 2005). US multinationals use approximately 40% more ICT capital per worker as compared to non-US multinationals which tend to devote only about 20% ICT capital per worker.But administrative deviations are large and costly upheavals, so change is often unhurried and problematic.

Conclusion

Despite containing a little inefficient and imperfect organisational system, UK has still got the remarkable human labour and its continuous and persistent efforts to improve each and every field are proving highly beneficial. Its wide research and policy making firm along with their strict policy implementation force are very swiftly changing the face of the market in UK.

References

Barrell, R. (1993). Internal and External Balance: The Layard, Nickell and Jackman Approach to the NAIRU and External Balance. Journal of Economic Studies.20(1).

Berument, H., Dogan, N. &Tansel, A. (2006).Economic performance and unemployment: evidence from an emerging economy. International Journal of Manpower.27(7).

Darling, J. (1992).New Strategies to Combat Long-term Unemployment in the UK.International Journal of Manpower.13(9).

Fox, C., Albertson, K., Ellison, M. &Martin, T. (2011).How will the recession affect crime rates in Greater Manchester.Safer Communities.10(3).

Frambach, H. (2005). The Younger German Historical School and the problem of unemployment.Journal of Economic Studies.32(4).

Kiely, J. &Blyton, P. (1990).Health Service Management: An Introductory Overview of Canada and the UK. International Journal of Health Care Quality Assurance.3(3).

Livanos, I., Yalkin, C. &Nuñez, I. (2009).Gender employment discrimination: Greece and the United Kingdom. International Journal of Manpower.30(8).

McGough, T. &Tsolacos, S. (1995). Forecasting commercial rental values using ARIMA models. Journal of Property Valuation and Investment.13(5).

Potts, N. (1999). Flexibility and all that: understanding the EU labour market. European Business Review.99(3).

Weber, B.A. (2002). The link between unemployment and returns to education: evidence from 14 European countries. Education + Training.44(4).


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