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Labour market recovery masks fastest rise in long-term unemployment since 2010 – IES comment on Labour Market Statistics
Long-term unemployment up by 28% on last year – with long-term unemployment among over-50s at its highest since 2016
18 May 2021
Dear Tim Worstall,
Commenting on today’s Labour Market Statistics, IES Director Tony Wilson said:
“Today’s figures confirm that the labour market is turning the corner – with a sharp rise in employee jobs in April as the economy reopened, vacancies rising and unemployment now clearly trending down. However you don’t have to look too far to see the lasting damage caused by a year of lockdowns and disruption. Long-term unemployment rose by more than a quarter in the last year, its fastest rate of growth since the 2010 crisis. Older people in particular are now starting to see sharp rises, with long-term unemployment reaching its highest in five years. With many firms reporting difficulties in filling jobs as the economy reopens, government and employers will need to do more to bring the long-term unemployed back into work and help avoid this crisis leading to lasting scars.”
Yes, quite so. As Richard Layard pointed out the difference in US and UK unemployment is largely over the number of long term unemployed. It pretty much doesn’t exist in the US as benefits – normally – run out after 6 months. It does exist in the UK as benefits don’t run out. Short term unemployment in both countries seems to vary similarly with the business cycle. The long term doesn’t.
The solution is, as Layard also pointed out, to stop paying people to be long term unemployed. Set a time limit on benefits and they won’t be.
True, we can go all Denmark and offer lots of training in the – say – two years leading up to the cut off but a cut off would stop long term unemployment.