full employment: modelling the impact on public finances

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

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LAB

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KET

=HALF THE MINSTRY OF JUSTICE DPT BUDGET


OLDER WORKERS

=



£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...



£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

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TO 7

2%

=IN 2013-14 THIS WOULD HAVE RAISED....


£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

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TO 7

2%

=ALMOST HALF THE TRANSPORTATION BUDGET

BAME POPULATION OF UK60%

2013 EMPLOYMENT RATE


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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....




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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

FROM THE NOUN PROJECT

UNISEX DESIGNED BY KENNETH APPIAH

GAVEL DESIGNED BY DIEGO NAIVE

SCALE DESIGNED BY MURALI KRISHNA

GLOBE DESIGNED BY J. ALI

HELP DESIGNED BY MOVEABLE FEAST COLLECTIVE : GDA 01

DOVE DESIGNED BY BRIAN KYLE

FIREARM DISPOSAL DESIGNED BY LUIS PRADO

TRAIN DESIGNED BY STEPHEN MCKAMEY

HIGHWAY DESIGNED BY JORIS HOOGENDOORN

PIGGY BANK DESIGNED BY ANSTEYDESIGN

FLOOD DESIGNED BY PATRICK MORRISON

WINDMILL DESIGNED BY FABIO GRANDE

TRANSMISSION TOWER DESIGNED BY OLIVIER GUIN

TREES DESIGNED BY RÉMY MÉDARD

UNITED KINGDOM DESIGNED BY JUAN PABLO BRAVO

full employment: modelling the impact on public finances

Economy & Finance