JSNA - Employment
- Key Issues and gaps
- Who is at risk and why
- The level of need in the population
- Current services in relation to need
- Key contact
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National, regional and local labour market policy has changed in recent years to focus on tackling worklessness rather than just unemployment.
The definition of worklessness is wider than unemployment. Unemployment captures people who are actively seeking work or have sought work within a specified period of time while worklessness also captures people that are not actively seeking but would like to find work. Examples of people who may be workless include:
- People claiming an ‘active’ benefit such as Job Seekers Allowance
- People claiming ‘inactive’ benefits such as Incapacity Benefit, the Employment and Support Allowance and Income Support
- People with caring responsibilities
- People with a health condition or disability
People who voluntarily take themselves out of the labour market (e.g. full time students and people who have taken early retirement) are not normally included in the definition of worklessness.
The strength of a country’s labour market is a key determinant of general economic performance. Indeed, before the recession the UK’s robust economic performance was, in part, been due to the strength and flexibility of its labour market. The recession and continued economic weakness has caused (and been fuelled by) a fragile labour market. Although UK unemployment has fallen recently, its current level of 2.49m is 85,000 higher than the level five years ago (see footnote 1).
In order to minimise the impact of the recession and return to sustainable growth, more needs to be done to tackle worklessness, particularly in areas where levels of worklessness still remain unacceptably high. In such areas, high levels of worklessness, as well as weakening the local economy, can be the cause or effect of wider social exclusion issues such as: ill-health; crime; substance abuse; low educational attainment; child poverty; and family breakdown – all issues that incur high financial and social costs.
The financial costs of worklessness cannot be underestimated. In 2011/12, £162.7m was spent on out of work benefit payments (see footnote 2) in Haringey, up by £13.8m since 2008/09; payments in London and England over the same period were £4.1bn (up by £369m since 2008/09) and £24.6bn (up by £2.3bn since 2008/09) respectively (see footnote 3). The impact on tax revenues also has to be considered. Freud (2007) (see footnote 4) estimated that the savings (including exchequer gains) related to moving an Incapacity Benefit claimant into work are £9,000 with the equivalent figure for a Job Seekers Allowance claimant being £8,100.
Measures to reform the welfare system are currently underway. Below is a summary of some of the changes to the welfare system that have been implemented or are proposed:
- From 2013 Universal Credit replace the following under a single benefit:
- Income based Job Seekers Allowance
- Income based Employment and Support Allowance
- Housing Benefit
- Income Support
- Child Tax Credit
- Working Tax Credit
- Capping Local Housing Allowance payments, from April 2011, to a maximum of £400 per week (for a 4 bedroom house or larger)
- Capping the amount payable across the following benefits to £500 per week for families and £350 per week for single people from 2013:
- Job Seekers Allowance
- Employment and Support Allowance
- Income Support
- Housing Benefit
- Council Tax Benefit
- Child Benefit
- Child Tax Credit
- Carers Allowance
- Industrial Injuries Disablement Allowance
- Making Child Benefit no longer payable to higher rate tax payers from 2013
- Capping the childcare element of Working Tax Credit at 70% of childcare costs (previously 80%) up to £175 per week for one child and £300 per week for two children or more
- Changing Working Tax Credit rules for couples with children so that from April 2012 they are only eligible for Working Tax Credit if their joint hours are 24 per week and one member of the couple works at least 16 hours per week. Previous Working Tax Credit eligibility was based on one member of the couple working at least 16 hours per week
- Reassessing all IB claimants from October 2010 to March 2014 using the new Work Capability Assessment. It is expected that most Incapacity Benefit claimants will be transferred to either Job Seekers Allowance or the Employment and Support Allowance
- Limiting contributory Employment and Support Allowance payments, for people in the Work Related Activity Group, to one year in line with the time limit for contributory Job Seekers Allowance payments
- Reforming Disability Living Allowance from 2013 with the introduction of the Personal Independence Payment
- Reducing Council Tax Benefit expenditure by 10% from April 2013
- Transferring existing lone parents claiming Income Support to Job Seekers Allowance once their youngest child is aged at least five from October 2011. Lone parents making a new claim, whose youngest child is aged at least five, will be required to make a claim for Job Seekers Allowance rather than Income Support
Despite being the main driver of the national economy, London's current employment rate of 70.5%, is below the UK employment rate of 71.6% (see footnote 5).
The issue of the employment rate in London has been lower than the UK’s since the 1990s, despite significant jobs growth in the capital over this period.
Reports published by the Greater London Authority (see footnote 6) and Her Majesty's Treasury (see footnote 7) suggest that much of the difference between London’s employment rate and the rest of the country can be explained by: commuter patterns (i.e. people working but not living in London); a higher number of full-time students, and the fact that London has a disproportionate number of people who tend to suffer from labour market disadvantage - such as ethnic minorities, lone parents, disabled people, people living in social housing and people with low or no qualifications. These factors are estimated to account for approximately 90% of the difference between employment levels in London and the rest of the country; the remaining unexplained 10% sometimes referred to as the ‘London effect’.
In addition to the groups mentioned above, young people are at particular risk in the labour market, particularly in the current economic climate. Youth unemployment across the UK currently stands at 960,000, 233,000 higher than the figure five years ago (see footnote 8).
The lesson from previous recessions in the 1980s and 1990s is that the scar of unemployment left on a young person (and indeed other groups in the population) can last for decades. This is because an unemployed young person is more likely to:
- Be unemployed and welfare dependent in later life with the average young unemployed person spending an extra two months per year out of work by their late twenties
- Earn £1,800-£3,300 less per year by their early thirties
- Be affected by mental and physical issues
- Get involved in anti-social behaviour (see footnote 9)
Despite being one of the richest cities in the world, 36% of children in London grow up in poverty –the highest proportion of any UK region or country (see footnote 10). There is a strong link between child poverty and worklessness with 73% of poor children in the UK living in a household where at least one adult is not in work (see footnote 11).
Over the period April 2012 to March 2013 the employment rate in Haringey was 69.1%, lower than the London and England rates of 69.5% and 71.1% respectively (see footnote 12). Although the employment rate in Haringey has increased since the period July 2010 to June 2011, it is lower than the peak of 70.1% observed over the period July 2006 to June 2007 (see figure 1).
Figure 1: Employment rate, April 2004-March 2005 to April 2012-March 2013
The employment rate for females in Haringey is currently 62.2%, 13.3 percentage points below the male employment rate of 75.5%. The gap between male and female employment rates in Haringey has increased by 4.5 percentage points since the period April 2004 to March 2005 (see figure 2).
Figure 2: Employment rate by gender, April 2004-March 2005 to April 2012-March 2013
The unemployment rate in Haringey, according to the International Labour Organisation’s (ILO) definition of unemployment (see footnote 13), is currently 8.9%, lower than the London rate of 9.1% but higher than the England rate of 8.0% (see figure 3).
Figure 3: ILO unemployment rate, April 2004-March 2005 to April 2012-March 2013
14.1% of the population aged 16-64 in Haringey currently (February 2013) claim an out of work benefit (see footnote 14), higher than the London and England rates - both 11.3%. The current claim rate is 7.1 percentage points lower than it was in February 2000 (see figure 4).
Figure 4: Out of work benefits, February 2000 to February 2013
Looking across Haringey, out of work benefit claim rates range from 29.4% in Northumberland Park (the third highest claim rate in London) to 6.1% in Crouch End and Muswell Hill (see figure 5).
Figure 5: Out of work benefits by ward, February 2013
6.8% of people aged 16-64 in Haringey currently (February 2013) claim the Employment and Support Allowance or Incapacity Benefit (includes Severe Disablement Allowance) higher than the London and England rates of 5.5% and 5.9% respectively. The current claim rate in Haringey is 0.2 percentage points lower than it was in February 2000 (see figure 6).
Figure 6: Employment and Support Allowance and Incapacity Benefit, February 2000 to February 2013
4.7% of the population aged 16-64 in Haringey currently (August 2013) claim Job Seekers Allowance compared to rates of 3.5% in London and 3.3% in England. Although the Job Seekers Allowance claim rate in Haringey is 9.8 percentage points lower than it was at August 1992, since August 2008 the claim rate has risen by 0.9 percentage points (welfare reform policy affecting lone parents will impact on these figures); however, increases in the Job Seekers Allowance claim rates across London and England have also been observed over this period (see figure 7).
Figure 7: Job Seekers Allowance, August 1992 to August 2013
Over the past year the Job Seekers Allowance claim rate in Haringey has fallen from 5.2% to 4.7%. However, over this period, the percentage of Job Seekers Allowance claimants who have been claming for more than 12 months has increased from 31.9% to 32.0%. In London an increase from 30.1% to 30.6% was observed and across England there was a similar rise from 27.3% to 30.2% (see figure 8).
Figure 8: Long-term Job Seekers Allowance claimants, August 1992 to August 2013
6.8% of young people aged 18-24 in Haringey currently claim Job Seekers Allowance, higher than the London and England rates of 5.1% and 5.9% respectively (see figure 9).
Figure 9: Job Seekers Allowance – young people aged 18-24, August 1992 to August 2013
33.6% of children in Haringey are currently (August 2010) living in poverty compared to 28.0% of children living in London and 20.6% of children living in England (See figure 10). The child poverty rate in Haringey has fallen by 9.2 percentage points since August 2006 (see footnote 15).
Figure 10: Child poverty, August 2006 to August 2010
57.4% of households in Haringey currently (2012) have at least one adult not in work, higher than the rates observed in London (51.3%) and England (46.7%). 23.1% of households in Haringey have no adults in work compared to 17.5% of households in both and England (see figure 11).
Figure 11: Household employment, 2012
Source: Annual Population Survey household datasets
64.6% of children in Haringey live in a household where at least one adult is not in work compared to 59.8% in London and 48.6% in England. 25.4% of children in Haringey live in a household where no adult is in work, higher than the London and England figures of 18.0% and 14.9% respectively (see figure 12).
Figure 12: Children and household employment, 2012
Source: Annual Population Survey household datasets
There are a number of national and local programmes in place to support people into employment including:
- Jobs for Haringey (local) - Haringey Council's programme to support workless local residents into employment.
- Work Programme (national) (external link) – a single intervention for out of work benefit claimants with support based on the barriers to employment a person faces rather than the benefit(s) they claim. The Work Programme replaced a raft of national welfare to work programmes, such as the New Deal and Pathways to Work.
- Jobcentre Plus (national) (external link) – a Government agency that will provide a range of services to help people claiming benefits back to work. This support is principally made available before someone accesses services delivered through the Work Programme.
- European Social Fund families programme (national) (external link) – an employment programme for families with multiple problems. The intention of the programme is to move family members at least closer to employment if not into employment and is delivered in London by Reed in Partnership
- Work Choice (national) (external link) – an employment support programme for disabled people
- Apprenticeships (national) (external link) – – jobs attached to specific learning and qualification opportunities.
- Youth Contract (national) (external link) – a range of employment support initiatives for young people that was introduced in April 2012.
- Ambrose Quashie: tel: 020 8489 6914, email: email@example.com
12. Source for these figures is the Annual Population Survey. Data for London and England will differ from those cited in earlier sections as they are sourced from the quarterly Labour Force Survey where data are only available for UK countries and regions
13. ILO unemployment is a measurement based on the International Labour Organisation's, a United Nations agency, definition of unemployment. Somebody is defined as being ILO unemployed if: they have actively looked for work in the last four weeks and are available to start work in the next two weeks; or they are out of work but have found a job and are waiting to start it in the next two weeks
15. Data taken from HMRC and based on the number of children living in families in receipt of either out of work benefits or tax credits where the reported income is less than 60% median income. These data are not directly comparable with data taken from the HBAI dataset
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