Monday, 21 November 2011

How 'active' is welfare in the UK? Spending on welfare in OECD countries

Unemployment figures last week showed that the UK is facing a serious problem of rising unemployment, with particularly worrying figures for young people. But how much do we do as a country to help unemployed people find work? One popular way that governments across the West have recently utilised to try and fight unemployment has been 'active' welfare, i.e. the provision of extra training for unemployed people in return for greater conditionality.

The graph below (taken from this DWP report) shows that the UK is one of the smallest spenders on active welfare compared with similarly advanced OECD countries. We spend just over 0.3% of GDP on active labour market policies, compared to other countries - like the Netherlands and Denmark - who spend over 1%.

Although these figures are from 2009, there is no evidence that the Government is seriously committing significantly higher amounts of funding to active labour market policies. They may be scrapping the New Deals in favour of the Work Programme, but this seems to be primarily a matter of tinkering with provision and incentives, not investment.

We all know that Britain faces a crisis in unemployment with the prospect of a generation of young people excluded from the labour market. If we want to deal with unemployment we need to direct more investment towards active measures which skill people appropriately for industries where there is a demand for labour. This should be a policy area where left and right can, for once, agree.

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