Evaluate the policies that could be used in your chosen country to meet unemployment targets (UK) - Essay Example

Policies that could be used in your chosen country to meet unemployment targets (UK) Unemployment is referred to that situation when an individual isout of work or is actively searching for a job. In UK the unemployment statistics is collected by Office for National Statistics (ONS) via survey. The figures they collect represent average number of people who are unemployed over a three month period. Fresh survey is carried out every three month and it is done in a way so that the months do not overlap.

The count of job claimant is also published by ONS, i.e the number of peoples who receive jobseeker’s allowance. It is observed that a lot many people are unable to claim this allowance and the unemployment figure is higher than the claimants count (BBC news, 2015). Scale of Unemployment: Unemployment rate in UK at the end of 2014 was 5.8%. It has continuously declined towards the end of 2014. (BBC news, 2015). Looking at the data from 1993 to 2010, we can say that overall unemployment rate has declined continuously till 2001 to 5.

1% from 10.4% in1991. It has picked up from 5.2% in March 2008 to 7.8% in 2010. During the second quarter of 2010, UK economy went into recession and therefore it faced massive unemployment. (Bell & Blanchflower, 2010). The unemployment rate over the years is given below in the chart. Nature of Unemployment: Unemployment rate declines with age. During the recession time in 2008, it is higher among men (8.7%), minority group and uneducated person. Looking at region wise, West Midlands, Merseyside, Wales, and Inner London etc.

has highest youth unemployment rate of 29.5%, 25.0%, 21.5% & 25.4%. Looking at the distribution of current occupation of the employed and last occupation of unemployed as per 2008, we will notice that unemployment is higher in low skilled occupation. For example, 11% people were engaged in elementary occupation but 25% people were unemployed in this section. The 2008 data says that employment has declined in Finance, business and other service areas. Unemployment was higher among black and young people. 17.3% black people were unemployed in UK in 2009-10.

(Bell & Blanchflower, 2010) Significant Problem: Youth unemployment has become the recent agenda of UK government. The youth unemployment has increased after the global financial crisis of 2008 and skill deficiency, failure of education system are primary factors. Youth unemployment rate stood at 22% in 2011 which is more or less near to the unemployment rate of European Union average. The absolute count of unemployed youth crossed over a million in 2011.(Lanning &Rudiger,2012). Overall unemployment reached to 2.

7 million at the end of 2011. (BBC) Cause of this problem: It is argued that recently the labor market rigidities are responsible for raising the structural unemployment. Work of economist like Blanchard & Wolfers, Adsera& Boix, Amisano & Seratti has proved that labor market institutions increase unemployment in process of adjusting unemployment in time of crisis or shocks to economy. Unemployment is such a condition in which there is a gap between the growth of capital force and growth rate of workforce.

Stockhammer has claimed that the reason of high unemployment in UK is not labor market rigidity but slow accumulation of capital (Monastiriotis, 2006). The increase in unemployment which has been observed in UK for past few years is not due to the reduced labor market flexibility but due to fall in demand for labor which itself is a direct result of fall in demand for goods and services. Lack of consumer confidence, shocks to raw material prices and ineffective monetary policies are some of the reason which is indirectly affecting unemployment in UK (Bell &Blanchflower, 2010).

Significant Causes:The reasons for youth unemployment differ widely across Europe. In Spain youths are trapped in informal economy, while in Italy there is the rising incidence of unpaid internship. In UK the young people find it difficult to compete with older ones as the later have strong contract or bonds with the employee due to highly regulative market. Youths find it difficult to get any permanent work. But it is argued that there are many other countries which have more employment protection but still it has lower youth unemployment.

It is said that youth in UK have lower technical skills but it has performed well in higher education. As a result many employers recruit people with higher degree although that is not required for the job. Ratio of youth to adult unemployment has worsened in recent years given below in the graph. It is also argued that failure in school system in UK is one of the causes of youth unemployment but youths have engaged themselves in education due to poor job market. It is the lack of good vocational training which is creating the gap between the employee and employer.

(Lanning &Rudiger, 2012) Policies to tackle this problem:Greater assistance should be given out to youths in their job search via the help of employment exchanges. Over the counter help is required for job search. Specialist counsellors are required in these exchanges so that they can acquaint the job seekers with the job matching to their skill. Advice on how to crack interviews, job form filling assistance should be given to them. One of the most important labor market policies is to provide training to unemployed people.

Many studies have been carried out regarding the effect of training program in the earnings or employment status of the unemployed people but negative results have been found. The probable cause can be that the employers might be searching for candidates with general competence which cannot be gained through vocational courses. In a study Grubb and Martin has shown hat training has helped the women to return to the labor market after a brief absence from the same. Another way of reducing the unemployment is via giving subsidies to firms to take unemployed workers but these policies are difficult to evaluate.

So more focus should be given on creating more jobs in economy which can be done by reducing non-wage labor costs, employment protection etc. Taxes which have been levied upon employment increases the cost of employing labor which thus reduces the job creation. Higher taxes create unemployment where there is no flexibility in wage structure due to wage bargaining institution. Dolado and others studies the impact of minimum wage and they found it has adverse effect on youth employment. On the other hand employment protection has a correlation with long term unemployment which indicated that employment protection will lead to higher duration of unemployment spells and those youth who will find more difficulty in securing job will drop out of the labor force.

Employment protection also discourages the startup firms and thus employment generation is adversely affected. So employment protection should be relaxed a bit so that youth unemployment can be reduced (Jackman, 2002). Conclusion: Considering youth unemployment it has been observed that compared to other European countries, many capable young people fail in the system of UK. This is due to the fact that there is lack of support from the government in matter of transition from school to work life.

High quality and diverse vocational education is required to mitigate this problem. On a long term basis policy making is required to make a link between industrial policy to education and training and a flexible educational system is required (Lanning &Rudiger, 2012). References Bell, D.N.F. &Blanchflower, D.G. (2010). UK Unemployment In The Great Recession, retrieved on February 11, 2015 from: http://www.dartmouth.edu/~blnchflr/papers/Bell-Blanchflower.pdf. BBC News (2015), Economy tracker: Unemployment.

Retrieved on 10 February 2015 from http://www.bbc.com/news/10604117 Jackman, R. (2002). Determinants of Unemployment in Western Europe and possible Policy Responses. Retrieved on February 11, 2015 from: http://www.unece.org/fileadmin/DAM/ead/sem/sem2002/papers/Jackman.pdf Lanning, T. &Rudiger, K. (2012). Youth unemployment in Europe: lessons for the UK, retrieved on February 11, 2015 from: http://www.researchonline.org.uk/sds/search/download.do;jsessionid=8EB0BC2ACB09A1B9DD9ED6AA24C78047?ref=B27130 Monastiriotis, V. (2006).Macro-Determinants Of UK Regional Unemployment And The Role Of Employment Flexibility.

retrieved on February 11, 2015 from: http://www.lse.ac.uk/europeanInstitute/LEQS/EIWP2006-01.pdf