15/07/2014 - The UK labour market weathered the recent recession moderately well. After a relatively limited fall, total employment recovered and it recently reached 30 million for the first time, even if a number of the new jobs created are low productivity and low paid. The recent reforms to help more people into work will need full implementation and some fine tuning if they are to meet their ambitious goals, according to a new OECD report.
Connecting People with Jobs: Activation Policies in the United Kingdom says that the UK has been at the forefront of efforts by OECD countries to transform and modernise measures to tackle unemployment and inactivity. This continues with the two major recent initiatives of Universal Credit and the Work Programme.
Around one in six people in work in the UK will claim Universal Credit, which rolls six benefits and tax credits into a single monthly payment to enable smooth transitions between unemployment and work. It will also ensure that work always pays as it will be withdrawn at a constant rate. But Universal Credit introduces new challenges, says the report.
In most cases a reduction in earnings will increase the Universal Credit payment, which may act as an incentive to work less, although job-search requirements and monitoring of job-search activities will mitigate this incentive. However, monitoring will need to be implemented on a large scale and implementation plans are still at an early stage.
The report supports the Work Programme’s innovative payment model to private providers, which places strong emphasis on sustained employment outcomes and gives providers freedom over service delivery. But the OECD sees the need for more active governance by the Department for Work and Pensions (DWP) to improve provider incentives, performance measurement and the market structure.
For Universal Credit the OECD recommends that the UK:
For the Work Programme the OECD recommends that the UK:
For further information, journalists should contact David Grubb (tel. + 33 1 45 24 91 76) or Kristine Langenbucher (tel. + 33 1 45 24 18 37) of the OECD’s Employment Analysis and Policy Division or Spencer Wilson from OECD’s Media division (tel. + 33 1 45 24 81 18). For a copy of the report, journalists should contact [email protected].