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Prepared by Lars Meuller.
Morgan (1996b) reports evidence suggestive of increased flexibility. Three years into the recovery of the 1990s, unemployment was about 2½ percent lower than at the same point in the 1980s. Meanwhile, real wages grew more slowly and regional disparities were reduced in the recession and the recovery.
Nickell and Bell (1996) present data for 1991-92 showing unemployment rates for people with low education at 10.7 percent (Germany), 17.1 percent (United Kingdom), and 11.0 percent (United States).
The unemployment rate for young men (aged 15-24) declined from 19.3 percent in 1983 in the United Kingdom to 18.3 percent in 1994. The OECD average was 14.8 percent (aged 20-24) in 1983 and 16.7 percent in 1994. For female youth, the corresponding numbers were 16.1 percent and 10.7 percent for the United Kingdom, and 16.4 percent and 16.9 percent for the OECD average.
Under the JSA last October those who are unemployed cease to be eligible for unemployment benefits after six months; thereafter, they are eligible only for means-tested benefits, and no longer enter the claimant count. In addition, unemployment benefits are more difficult to obtain under the new scheme, with the claimant having to prove serious efforts at job seeking.
The program will be implemented by the Employment Service, in association with other government agencies and departments and with advice from an employer-led Advisory Task Force.
Emphasis will be placed on providing 50,000 new trained child carers to support the initiatives for lone parents (see below).
Full-time training in skills up to National Vocational Qualification level 2. The “16 hours study rule” which has prevented unemployed people from accessing full-time education and training will be reformed.
The Budget allocates £3.5 billion for the combined cost of the programs for youth and long-term unemployed people over the lifetime of parliament. Two other initiatives under Welfare-to-Work involve measures to help lone parents find and take work (£200 million allocated in the Budget) and to improve the quality of schools’ infrastructure (£1.3 billion). The government also aims to extend the Welfare-to-Work approach to other groups excluded from the labor market (provisions of £200 million made over the course of parliament).
Based on the rather mixed results of the Working National Program, significant reforms were subsequently introduced to improve the efficiency of labor market services. It is too early to assess the revamped program.
Coe and Snower (1997) point to important policy complementarities (policies have greater effect on unemployment when implemented in conjunction than in isolation) underlining the case for “fundamental” labor market reform.
The budgetary allocation for the Welfare-to-Work program is capped by the revenues from the Windfall Tax; in case of a rise in unemployment, the number of people benefiting from the program would be restricted, unless new legislation authorized additional funding.