The Government’s response to
rising unemployment
This recession has been deeper than the last two…
3%
2%
1%
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
Fall in output
1980's
1990's
Current
ONS: Quarterly National Accounts
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Number of Quarters
But unemployment has risen less…
3,000
Claimant count (thousands)
2,500
Turning point
2,000
1,500
1,000
500
1980s
1990s
Now
ONS: NOMIS
0
1
3
5
7
9
11 13 15 17 19 21 23 25 27 29 31 33 35 37 39
Number of months
Unemployment since 1970
ILO unemployment
Claimant count
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
ONS: Labour Market Statistics, NOMIS
0
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
Employment has fallen less than in past
recessions….
Cumulative fall in employment (thousands)
0
-200
-400
-600
-800
-1,000
80s (Dec 79-Aug 87)
-1,200
90s (Jun 90-Nov 98)
-1,400
Current (Apr 08-Oct 09)
-1,600
ONS: Labour Market Statistics
-1,800
0
2
4
6
8
10 12 14 16 18 20 22 24 26 28 30 32 34
Number of quarters
Unemployed - inflows and outflows
Inflows to JSA
Outflows from JSA
450,000
400,000
350,000
300,000
250,000
200,000
DWP Analysis based on ONS: NOMIS data
150,000
Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09
Most people leave unemployment
quickly
Proportion of new JSA claimants leaving within certain periods
100%
90%
1 year
80%
70%
60%
6 months
3 months
50%
40%
30%
20%
10%
DWP Analysis based on ONS: NOMIS data
0%
1994
1996
1998
2000
2002
2004
2006
2008
We have not seen a move onto inactive
benefits
JSA
Incapacity benefits
Lone parents on income support
3,500
3,000
Thousands
2,500
2,000
1,500
1,000
500
ONS: NOMIS, DWP: Tabulation Tool
0
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
19
01
20
03
20
05
20
07
20
09
20
Active labour market policy
Jobcentre Plus
- 750 High Street outlets
- 70k people
Handling
benefit
claims
Helping
people
into work
Providers
- £1bn market
- paid for activity and
outcomes
New
Deals /
Flexible
New Deal
Pathway
s to
Work
Commissioning strategy
• Payment by results
• Larger, longer contracts
So better incentive to invest
long term
• Prime contractors
• More competition