The road to full employment

3 March 2016

Each month new labour market statistics are released. And each month they generally show a further increase in employment, though pay remains below pre-recession levels and there are many people who would look to work more hours or get a permanent job. Nonetheless, it is nothing short of astounding that employment held up so well during the recession and has risen so much since.

The Resolution Foundation today publish an important and authoritative report looking at how much further we can go: what would really constitute full employment and what do we need to do to get there.

They look at what overall employment would look like if gaps were closed for regions and groups with lower employment today. The answer, at the end of a long report that’s well worth reading, is an employment rate of 78% by 2020. This would need a further 2.4 million people in work over this Parliament, a huge increase. But the good news is that we’re currently on track to do this.

The economy is likely to be a major driver of whether we stay on track, so the current headwinds and slowdown could blow us off course. But policy can also play a crucial role in both increasing overall employment, and ensuring that people earn more as a result and have opportunities to progress.

There are three particular areas I would highlight.

The first is making work pay. The rise in the National Minimum Wage, efforts to promote voluntary take-up of the Living Wage, tax credits and Universal Credit, all play a role. It is important that the tax and benefit system as a whole promotes work, ensures that it pays, and rewards progression.

The second is the role of the learning and skills system. I’m pleased to see the Resolution Foundation endorse Learning & Work Institute’s proposal that a small amount of the Apprenticeship Levy be top-sliced to promote high quality and extended access. The Higher Education sector spends around £1bn each year on widening participation, we think that effort (if not the full scale) should be mirrored for Apprenticeships. Apprenticeships can be a great route into work and chance to build a career. We need to ensure everyone who can benefit from them, is able to access them.

The third is the employment system. This has made an important contribution to the overall strength of our labour market. But we now need to think about how to make it work better for groups with lower employment rates (in particular people with health problems and disabilities) and support progression from low pay too. The forthcoming increased co-location of Jobcentre Plus services with Local Authority services provides a hook to do this. But we must measure the success of services by whether people get jobs and progress, not just whether they leave out-of-work benefits.

Here there is a great opportunity to link up DWP’s work on ‘in-work conditionality’, the idea that support to progress will be given to in-work but low paid Universal Credit claimants, with Apprenticeships and Advanced Learner Loans in the learning and skills system. This is what we’re planning to trail in Ambition London, our flagship project to join up support for careers progression.

It’s great to see full employment on the agenda again, there’s a reason it’s one of Learning & Work Institute’s core ambitions. The Resolution Foundation’s work maps out the scope to increase employment by 2.4 million by 2020. The challenge is set. We will be a fairer and more prosperous society if we can rise to it.