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Recurring Unemployment

Volume 571: debated on Wednesday 17 April 1996

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2.52 p.m.

What policy proposals they have to reduce recurring unemployment, and with whom they are discussing their initiatives to that end.

My Lords, government policies work to secure lower unemployment and a sustained improvement in labour market efficiency, so that unemployed people can compete effectively for jobs and unemployment will be for shorter periods. Policies to help unemployed people return to work are the subject of continuing debate both at home and abroad, and the Government play their full part.

My Lords, I thank the Minister for that Answer and I welcome the decrease in unemployment. Nevertheless, widespread unemployment among young people usually contributes to a feeling of insecurity and often they turn to crime. Can that be taken into consideration and appropriate action taken to ensure that there is no increase, because the more young people who are unemployed, the higher the crime rate among young people? I am sure that the Government will take note of that and will act to alleviate the problem.

My Lords, I am grateful to the noble Lord for drawing the attention of the House to the further fall in unemployment, which was announced by my department today. There has been a fall of some 25,700 on the month and a fall of 165,200 over the year. That brings down unemployment to some 7.6 per cent.

The noble Lord rightly referred to the problems relating to youth unemployment and he is right to draw attention to the dangers of that. However, I would not necessarily accept his link between youth unemployment and crime. Perhaps I may remind him that while youth unemployment in this country is high at some 15 per cent., in countries such as France and Spain, which have signed up to the Social Chapter and have a minimum wage, the figures are higher. In France it is some 25 per cent. and in Spain some 40 per cent. I recommend that the noble Lord does what he can to persuade the party opposite to drop all its suggestions that we should sign up to the Social Chapter and introduce a minimum wage.

My Lords, am I right in believing that there has been published today a new set of unemployment figures showing that they have reached a five-year low, or very nearly?

My Lords, my noble and learned friend is right; the latest figures are the lowest since April 1991. As I said to the noble Lord, Lord Molloy, we have seen a further fall of 25,700 this month, making a fall of 165,200 over the year. It is a fall of some 7 per cent. and brings the figure to some 7.6 per cent.

My Lords, does the Minister agree that he has not answered my noble friend's Question? He asked about recurring unemployment; in other words, the way in which unemployment varies. When this Government came to office our figures were the third lowest in Europe and the fourth lowest in the OECD. By 1982 they had doubled and we were the ninth lowest in Europe and the twelfth lowest in the OECD. Now we have returned to a figure half way between the two. The fact is that under this Government unemployment has gone up and down and up and down and now it is hardly moving. During the past four months it has gone up, down, up, down and at the present annual rate it will be about 50,000 a year. That is what my noble friend Lord Molloy is saying and the Minister has no answer.

My Lords, the noble Lord's Question refers to recurring unemployment, which is what I addressed in my original Answer. Obviously, we recognise that there are problems for people who experience recurring spells of unemployment, but we pursue policies which ensure that there is a flexible labour market which will allow people to find jobs. Whereas some 300,000 people—there or thereabouts—lose their jobs every month, some 300,000 people—there or thereabouts but on this occasion 300,000 plus 25,000—find new jobs. The noble Lord will be pleased to hear that of those who become unemployed some 50 per cent. find a new job within three months and a further two-thirds find a job within six months. The way in which to address the problems of recurring unemployment is to ensure that there is a flexible labour market.

My Lords, does my noble friend agree that the Government's rejection of the Social Chapter is a fine example of their determination to tackle recurring unemployment?

My Lords, my noble friend is absolutely right. That is why I am trying to persuade the party opposite of the folly of continuing to pursue its policy of signing up to the Social Chapter and, even worse, signing up to a minimum wage, which, as I am sure many members of the party opposite recognise, would lead to a loss of jobs.

My Lords, the Minister will recollect a report from the CBI, which is now a number of years old, which puts the cost to business of transport congestion in London at £15 billion a year. Do the Government yet have any concrete measures in prospect to reduce those costs?

My Lords, I do not recall that report and I fail to see what it has to do with the problems of recurring unemployment.

My Lords, is the Minister aware that we on these Benches warmly welcome the reduction in the number of unemployed, which was announced today? Is he further aware that, if he had announced that the figure had been reduced to the level that was in existence at the time the Government came to power 17 years ago, we would have been standing up and cheering? As the Government frequently comment on their success of conquering unemployment, and the Minister has done so today, what does he have to say about the better records of our two large trading countries, America and Japan, and three European Union countries?

My Lords, I suggest that the noble Lord looks at what our competitors in Europe are doing and looks at their folly in pursuing the Social Chapter and minimum wages, which are leading to a decline in the number of jobs as against the trend in this country. The noble Lord is right to draw attention to the success of the American economy in creating jobs. We must and are trying to emulate that but the party opposite is not trying to do so with its adoration and devotion to introducing a minimum wage. Perhaps I may remind the noble Lord of what was said by the deputy leader of his party some years ago when speaking of the minimum wage. He said:

"I knew the consequences were that there would be some shakeout. Any silly fool knew that".

My Lords, is the Minister aware that the rate of unemployment in Japan is 3.4 per cent.? Should not that be the goal of this country?

My Lords, does the noble Lord recognise that unemployment rose considerably after we joined the ERM and has come down consistently since we left it? Can I have an assurance that under no circumstances will the Chancellor or the Government be bullied into rejoining a revamped ERM or any ERM at all?

My Lords, the noble Lord points to the changes which have taken place since we left the ERM. The noble Lord should recognise also that the Government have pursued other policies which have led to the fall in unemployment; for example, low inflation, low interest rates and a continuing programme of labour market reforms. If the noble Lord could persuade his party of the wisdom of pursuing those policies, I should be most grateful.

My Lords, the Minister referred to a five-year low. Will he go further and tell the House the figure for unemployment when this Government took office in 1979?

My Lords, the noble Lord will be very interested to know that unemployment did rise in the early years of this Government but then fell. It then rose again. However, it is interesting to note that the second peak was lower than the earlier peak. That is the first time that we have seen a fall from one cycle to the next since the early 1960s.

My Lords, could I have an answer to my question? What was the unemployment figure when this Government took office?

My Lords, I do not have that precise figure. The point which I was trying to make—and it is a very valid point—is that for the first time since the 1960s, unemployment peaked at a lower figure.

My Lords, are there not two sides to this Question? Should we not explain unemployment in terms of the number of people to be employed? Will my noble friend give those figures in relation to the past few years?

My Lords, my noble friend is quite right to draw the attention of the House to levels of employment. I assure him that the United Kingdom has some 68 per cent. of its working-age population in employment compared with a European Union average of 59 per cent., while the average for Germany is 65 per cent., for France 59 per cent. and for Italy, 51 per cent. I assure my noble friend that not only is unemployment falling but employment is rising.

My Lords, will the Mignister bear in mind that when those unemployed people eventually find jobs, they make a contribution to the economy and the fact that they do not have to be paid unemployment benefit must help the Treasury? Will all those points please be considered by the Government?

My Lords, obviously my right honourable friend the Chancellor of the Exchequer takes those matters into account. However, I am sure that the noble Lord will accept that it is simplistic to think that one can merely spends one's way through those problems and by merely spending more money, create more jobs. Jobs will be created by the right sort of economy.

My Lords, will the Minister give the House the figures for unemployment in percentage terms and in actual terms were the Government still to use the same scale for assessing those matters as was used when they came into office in 1979?

My Lords, if the noble Baroness is alleging that in some way we have fiddled the figures, I totally reject that allegation. As the noble Baroness will know, there are two counts for the unemployment figures. There is the straightforward count of those out of work and in receipt of benefit; and there is the ILO recognised count, the labour force survey, which comes out quarterly. The noble Baroness will know that those two figures broadly follow each other and provide broadly the same figures. Can we have an assurance from the party opposite as to whether it will be reverting to a different method for counting those figures?