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Islands of joblessness - 11/2000

Last barrier to full employment, says The Industrial Society

Current employment strategies won't deliver Government hopes for full employment, says Futures at The Industrial Society. In a new report, it argues that a richer strategy, including local job creation policies and a privatised Employment Service, is needed to overcome persistently high unemployment in poor neighbourhoods around the country.

Despite employment figures at a 20 year high, In Search of Work: employment strategies for a risky world suggests that official figures understate the true extent of local joblessness. Moreover, the prevailing focus on welfare to work and supply-side measures are not tackling persistent local jobs gaps. These local economies lack 'stickiness': too much money flows out of the area to build the local employment infrastructure and generate much-needed new jobs. Poor areas represent massive untapped markets for business.

The report also argues that welfare to work policies have to adapt to deep changes in the employment landscape. In a riskier labour market, New Deal has had some success, but isn't matching employers' and jobseekers' needs well enough. In particular, more employer-friendly policies and better mechanisms to support people through working life are required.

The report shows that: claimant unemployment in the 20 areas of highest joblessness is over twice the national average; inactivity is often 10 percentage points higher; in unemployment hotspots, up to 12 people want work for every job available; worst-hit areas include Liverpool, Middlesborough, Hackney and Lewisham; residents of the average neighbourhood spend 37% of their money outside the area, while poor areas lose 60-70% of consumer expenditure; up to 40% of jobs gained by New Deal participants last 13 weeks or less.