UK can take comfort from OECD message on jobs and incomes but further progress is needed

Todayís report from the Organisation for Economic Cooperation and Development should be seen as an endorsement of the British model of tackling structural unemployment. But the lesson of the revised OECD Jobs Strategy is that the UK needs to do much more to reduce core joblessness, increase labour productivity and stem growing income inequality, says CIPDís Chief Economist, Dr John Philpott.

Philpott comments, ìBritain has succeeded in adopting the OECDís prescription for macroeconomic stability, flexible labour markets and a ërights and responsibilitiesí approach to welfare reform. This broad approach has, under both Conservative and Labour governments, helped reduce structural unemployment since the late 1980s. But deficient education and training and still high levels of inactive jobless people means that more must be done to both boost labour productivity and raise the incomes of the poorest in society. And in this respect, much will depend on government and business to pursue a flexible Smart Working policy agenda together.

Philpott points to the bad news in the report for key continental economies like France and Germany that have yet to embrace the kind of flexible labour market regime we enjoy in the UK. There is better news though for the Scandinavian countries, which have managed to combine high employment with high productivity and little widening of the income gap.

Philpott concludes, ìBritain has much to learn from the latter experience, though it should not be forgotten that the Scandinavian countries are relatively small and culturally homogeneous with strong shared collective values. The UK remains the most successful large economy in the EU ñ its emerging ëAnglo-Social modelí demonstrating that economic flexibility can go hand in hand with social progress.í