Unemployment: Signs of recovery that leave too many behind

With long-term joblessness on the rise, the auguries are far from promising

Not so long ago, the economy was a resolutely gloomy topic and the prospect of a triple-dip recession loomed large. Recent months have proved rather cheerier than expected, though. Not only did we avoid a third slump; revisions to historic GDP statistics adjusted away the second dip, too. Better still, there are now real glimmers of daylight.

Given both the scale of the financial crisis and the inherent unpredictability of world events, it would be unwise to bank on a swift and untroubled recovery. But there is no denying that indicators from across the economy are starting to tip upwards. From construction to car sales to mortgage approvals – where once there was torpor, there are now tentative signs of life.

At first glance, yesterday’s unemployment numbers are particularly encouraging. Given the trying economic circumstances, the jobs market held up surprisingly well in the aftermath of the financial crisis (most likely thanks to the painful squeeze on wages). In the past 12 – largely stagnant – months alone, some 300,000 more people have found their way into work. And evidence that unemployment is continuing to fall – by a total of 57,000 in the three months to May, according to the latest official figures – raises the hope that the recent hints of recovery are feeding through into real lives and sustainable growth. Even youth unemployment is edging downwards.

There the good news ends, however. The number of 16- to 24-year-olds who are out of work may have dropped below the totemic one million, but it is still painfully high. Meanwhile, although overall activity in the labour market is on the up, the problem of long-term joblessness is only growing worse. There are now more than 900,000 people who have been unemployed for more than 12 months – the highest level since 1996; and with so much evidence to suggest that those out of work when they are young struggle to recover, the auguries are not promising.

Sad to say, the spike cannot be rationalised as an unavoidable consequence of the spectacular economic shock in 2008. The issue here is not the macroeconomics of credit crunch, unaffordable debt and worldwide slowdown. Rather, it is a reflection of structural issues that successive governments have failed to

address. Indeed, the tragedy is that we did not take advantage of the strong growth of the boom years to get to grips with the problem. We cannot afford to make the same mistake again.

There is no single solution to long-term unemployment. But there are lots of little things that can be done. The most obvious is to ensure that young people start off on the right track; and that means making it all-but impossible to leave school without either a job or a meaningful educational opportunity to go to. Welfare reforms are a factor, here, as is Labour’s proposed jobs guarantee, providing six months of work for the long-term unemployed. Measures to make it easier – and cheaper – to hire new people would also help.

But the biggest piece of the jigsaw is education. Employers’ perennial complaint is that they cannot find staff with the skills that they need. Yet although governments routinely make the right noises, when it comes to apprenticeships, to high-quality vocational qualifications, and to meaningful retraining for those made redundant, Britain still lags behind.

In fairness, long-term unemployment is now on the agenda across the political spectrum. But there needs to be more than talk. The changes that are required are neither easy nor glamorous. If and when the economy gets going again, they must be a priority.