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FULL EMPLOYMENTMODELLING THE IMPACT ON PUBLIC FINANCES
BRITAIN NEEDS TO IMPROVE PEOPLE’S CHANCES OF FINDING A JOB AND TACKLE THE BARRIERS TO GAINING WORK
WOMEN OLDER WORKERS DISABLED WORKERS
BAME POPULATION
LOW OR NO QUALIFICATIONS
UK REGIONS
REMOVE BARRIERS TO WORK FOR...
IMPACT ON THE PUBLIC FINANCES
% INCREASE IN FEMALE EMPLOYMENT
10
INCOME TAX
NATIONAL INSURANCE
£2.1bn
£1.7bn
BAME POPULATION OF UK60%
2013 EMPLOYMENT RATE
13 %AVERAGE EMPLOYMENT RATE OF WHITE PEOPLE 65%
EMPLOYMENT RATES OF PEOPLE WITH LOW OR NO QUALIFICATION
BOOST TO
£0.6bn £0.9bnINCOME TAX NATIONAL
INSURANCE
INCREASING THE EMPLOYMENT RATE OF OLDER WORKERS
MINSTRY OF JUSTICE DPT BUDGET
INCREASING EMPLOYMENT RATES IN LDN, DEVOLVED NATIONS, MIDLANDS AND THE NORTH TO 72%
HALF DWP BUDGET
BY +1M
WOULD RAISE £ EQUAL TO
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
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.
2013 MALE EMPLOYMENT RATE 2013 FEMALE EMPLOYMENT RATE
10%
FEMALE WORKERS
THE UK’S FEMALE EMPLOYMENT RATE LAGS BEHIND A NUMBER OF INDUSTRIALISED ECONOMIES
74%AVERAGE EMPLOYMENT RATE OF THE 5 BEST PERFORMING OECD COUNTRIES
GENDER EMPLOYMENT GAP
% INCREASE IN FEMALE EMPLOYMENT
=1,300,000
MORE WOMEN IN PAID WORK
IN 2013-14 THIS WOULD HAVE RAISED....
£1.7bn
£2.1bnINCOME TAX
NATIONAL INSURANCE
HALF THE DFID BUDGET
10
WHAT IS THE IMPACT ON THE PUBLIC FINANCES IF MORE WOMEN WERE IN WORK?
=
£3.2bnMEANS-TESTED BENEFITS
£0.4bnNON MEANS-TESTED BENEFITS
£0.9bnNON-CONTRIBUTORY JSA
£1bnHOUSING BENEFIT
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INCREASING FEMALE EMPLOYMENT BY 10% WOULD ALSO MEAN SAVINGS
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
WOMEN: POLICY DIRECTIONS
%INCREASE IN EMPLOYMENT OF OLDER WORKERS
=1,200,000MORE OLDER WORKERS IN PAID WORK
15
£2.0bn
£1.3bn
INCOME TAX
NATIONAL INSURANCE
AN INCREASE OF OVER 1m OLDER WORKERS
IN T
HE
LAB
OU
R M
AR
KET
=HALF THE MINSTRY OF JUSTICE DPT BUDGET
IN 2013-14 THIS WOULD HAVE RAISED....
OLDER WORKERS
=
£1.8bnMEANS-TESTED BENEFITS
£0.3bnNON-CONTRIBUTORY JSA
£0.4bnPENSION CREDIT
£0.2bnRETIREMENT PENSION
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INCREASING THE EMPLOYMENT OF OLDER WORKERS BY 15% WOULD ALSO MEAN SAVINGS
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OLDER PEOPLE: POLICY DIRECTIONSTO 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
EQUAL OPPORTUNITY TO WORK, EMPLOYMENT RATE OF PEOPLE WITH A DISABILITY IS MUCH LOWER THAN THE EMPLOYMENT RATE OF THE TOTAL POPULATION
MORE NEEDS TO BE DONE TO ENSURE EQUAL ACCESS INTO PAID WORK.
INCREASE THE NUMBER OF DISABLED PEOPLE IN WORK BY 0.5m
=£0.6bn
£0.7bnINCOME TAX
NATIONAL INSURANCE
INCREASING THE NUMBER OF DISABLED PEOPLE IN WORK WOULD MEAN INCREASE OF
£0.6bnWORKING TAX CREDIT
£0.06bnCHILD TAX CREDIT
BUT A FALL OF...
IN 2013-14 THIS WOULD HAVE RAISED....
£1.8bnMEANS-TESTED BENEFITS
£0.3bnNON-MEANS TESTED BENEFITS
£0.9bnINCOME SUPPORT
£0.5bnHOUSING BENEFIT
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INCREASING THE NUMBER OF DISABLED PEOPLE IN WORK BY HALF A MILLION
DISABLED WORKERS: POLICY DIRECTIONSSTRUCTURAL 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
A LOW EMPLOYMENT RATE IN LONDON67%
EMPLOYMENT RATES ACROSS REGIONS VARY...
A HIGH EMPLOYMENT RATE IN EAST & SOUTH EAST76%
• 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
==
HOW THE REGIONS ARE SPLIT:
%IN EMPLOYMENTRATES IN LONDON, THE DEVOLVED NATIONS, MIDLANDS AND THE NORTH
=600,000
MORE PEOPLE IN PAID WORK
£1.3bn
£1.8bnINCOME TAX
NATIONAL INSURANCE
ALMOST HALF DWP BUDGET
72 EMPLOYMENT RATE IN UK AT THE END OF 2013
AN
INC
REA
SE
TO 7
2%
=IN 2013-14 THIS WOULD HAVE RAISED....
£2.2bnMEANS-TESTED BENEFITS
£1bnNON-CONTRIBUTORY JSA
£0.4bnNON MEANS-TESTED BENEFIT
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INCREASING THE EMPLOYMENT RATE OF LONDON, THE DEVOLVED NATIONS, THE MIDLANDS AND THE NORTH (TO 72%)
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UK REGIONS: POLICY DIRECTIONSA 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
%
£0.9bn £1.2bnINCOME TAX NATIONAL INSURANCE
13AVERAGE EMPLOYMENT RATE OF WHITE PEOPLE
HIGHER THAN THE REST OF THE POPULATION
MORE DIVERSE WORKFORCE: IMPROVING BAME EMPLOYMENT RATES
IN THE EMPLOYMENT RATES OF BAME POPULATION WOULD
= 620,000
MORE WORKERS IN THE LABOUR MARKET
AN
INC
REA
SE
TO 7
2%
=ALMOST HALF THE TRANSPORTATION BUDGET
BAME POPULATION OF UK60%
2013 EMPLOYMENT RATE
IN 2013-14 THIS WOULD HAVE RAISED....
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£1.3bnMEANS-TESTED BENEFITS
£0.5bnNON-CONTRIBUTORY JSA
£0.1bnNON MEANS-TESTED BENEFITS
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0INCREASING THE BAME EMPLOYMENT RATE TO 72% WOULD MEAN SAVINGS
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BAME POPULATION:POLICY DIRECTIONSTHERE 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
65%
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.
EMPLOYMENT RATES OF PEOPLE WITH LOW OR NO QUALIFICATION
= 150,000
MORE WORKERS IN THE LABOUR MARKET
BOOST TO
£0.7bn £0.9bnINCOME TAX NATIONAL INSURANCE
= MORE THAN THE DECC BUDGETIN 2013-14 THIS WOULD HAVE RAISED....
£1.5bnMEANS-TESTED BENEFITS
£0.7bnNON-CONTRIBUTORY JSA
£0.3bnNON MEANS-TESTED BENEFITS
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INCREASING THE EMPLOYMENT RATE OF THOSE WITH LOW OR NO QUALIFICATIONS TO 65% WOULD MEAN SAVINGS
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LOW SKILL/ NO QUALIFICATIONS: POLICY DIRECTIONSSKILLS 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
CREDITS
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