Growth won't solve the UK's labour market problems

The UK’s labour market has deep-seated structural problems that will not be solved by a return to economic growth alone, the CBI has warned.
 
In a report entitled ‘Mapping the route to growth: rebalancing employment’, the employers’ lobby group said that the decade of growth before the recession had masked a number of entrenched problems.
 
Mainly urban, post-industrial pockets such as Teesside, Hull, Liverpool and South Wales experienced high long-term unemployment rates, relied heavily on public sector jobs and suffered serious skills shortages.

But projections of future employment trends suggested that these labour market divisions would only deepen as the recovery continued. Demand for highly-skilled jobs would be concentrated even more in London and the South East and, by 2017, 56% more posts than today would require people to hold graduate-level qualifications. By the same token, demand for workers with no qualifications would fall by 12%.
 
While lower skilled jobs had traditionally acted as labour market entry points for people moving out of unemployment, the fact that fewer of these jobs would be available in future emphasised the growing need for all job-seekers to have a minimum skills-level, the report said.
 
John Cridland, the CBI’s director general, added: “The government has rightly focused on tackling the structural deficit in the public finances, but needs to apply the same rigour to attacking the structural jobs deficit. Only private sector growth can create the jobs we need and we must ensure the fruits of recovery are felt in every region.”
 
But getting the UK working again would require “fresh thinking and innovative solutions”, he added.
 
The organisation has mapped the state of the labour market on a region-by-region basis with the help of geographic information system software from vendor Esri. It found that unemployment patterns were highly regionalised and unemployment did not follow a simple North-South divide.
 
For example, while post-industrial areas such as Teesside and Hull were unemployment black spots, parts of Manchester and Edinburgh, which focused on services or high-tech sectors, tended to have lower unemployment rates.
 
Cridland said: “The answer is not bussing people to where the jobs are. We need to tackle the structural causes of unemployment, while doing all we can to get the private sector really motoring in all regions in the UK.”
 
But areas with the strongest jobs growth during 2004 and 2007 saw the most rapid falls in employment during the recession, the report said. This suggested that, in many cases, job creation was the result of a cyclical economic boom rather than a real structural improvement in the labour market.

“In the coming months, the CIB will be working with a broad range of businesses and other stakeholders to come up with practical solutions to help get all of the UK working,” Cridland said.

Source HR Zone