Unemployment

Baroness Meacher Excerpts

Thursday 11th June 2020 Lords Chamber

[Baroness Meacher (CB) [V]]

My Lords, the OECD has predicted that the level of unemployment in this country will reach 11.7% in the third quarter. Will the Minister and his colleagues work with the DWP to adjust the universal credit system and introduce active labour market policies that support unemployed people back into work effectively, as Sweden has shown most particularly? Many of those jobs could be green jobs; such policies could take the place of the sanctions regime in the universal credit system, which does little else other than punish people who are unable to find work.

[Lord Agnew of Oulton [V]]

As the noble Baroness will know, our furlough scheme has been one of the most generous in Europe, and the whole point of it is to protect productive capacity. We certainly hope that, over the next few months, its gradual withdrawal will give businesses time to adjust and come to terms with what the opportunities are for them to get back into business. We will certainly keep the mechanisms of universal credit under review. However, it is a far more flexible system than existed in the past.

Income Equality and Sustainability

Baroness Meacher Excerpts

Wednesday 6th May 2020 Lords Chamber

[Baroness Meacher (CB)]

My Lords, one of the main economic risks from the pandemic will be the likelihood of mass long-term unemployment, as we experienced in the 1980s. Today, the Resolution Foundation predicts a 600,000 increase in youth unemployment this year—this is just the beginning. The pandemic is destroying economies across the globe, and recovery will take time. Long-term unemployment destroys a person’s confidence and mental health, while employers are very reluctant to take on demotivated, depressed, unemployed people. The most at risk of unemployment are the least well qualified; this is fundamentally an issue of inequality.

At a time of mass unemployment, the punitive universal credit regime, providing minimal benefits within a fear-inducing sanctions framework, becomes immoral. Unreformed, it will create serious mental health problems, crime, and an even bigger drugs problem, funded by crime, than we have already.

A part of the solution will be active labour market policies and the job guarantee. In 2005 and 2007, the OECD published evidence of the effectiveness of such policies, which ensure that, after a specified period out of work, an unemployed person will be offered work in the public or charity sectors at the rate for the job, probably at the minimum wage. Denmark and the Netherlands were examples of countries which pursued such policies and had low unemployment against the trend. Had the UK adopted these policies, we would not have had 2.5 million out of work for about four years after the global financial crisis of 2008. Yes, there would be a net cost to the Exchequer, but the benefits would far outweigh those costs: the improved employability of those involved and higher tax revenue and lower benefit costs over time; and, at the personal level, less mental breakdown, crime and drug use. In essence, it would mean greater equality and sustainability and a healthier and happier society.