Thursday, August 18, 2011

Addressing UK Unemployment

The rise in unemployment is clearly bad news, although as always you have to be very cautious about one month's statistics.

I have been urging the govenment to cut Employers NHI (= payroll tax) for employers to employ people who have been claiming benefits. What's really needed is negative NI because most people who have been unemployed for over 6 months face grave difficulties in getting (back) into work and employers will generally prefer to offer people already in jobs or recent.  But this would require legislation and have to wait until April.

I suggest therefore that the Employer NIC Holiday be extended for this year only to cover any case where a business has employed someone who has been unemployed and claiming benefits for 3 months or more.  No new forms or systems would be needed for HMRC.  It would be easy to count the number of people who have been helped into work this way. The net cost of this would be tiny since employed people pay taxes and of course would be off the dole.

Looking at the detailed statistics the following points are striking:
  1. Private Sector Employment increased by 104k in the quarter to March 2011.  Public sector decreased by 39k
  2. Of the 240k increase in employment in the year to June 2011, 290k was accounted for by people born outside the UK: employment of people born in the UK went down by 50k. 
Now some of that will be due to age profile: people who retire are much more likely to have been born in the UK and so are public sector workers.  But it's hard to resist the conclusion that much of this is due to the generally poor quality of UK-born applicants. Indeed although we have doubled our staff in the last year 50% of the new hires are non-UK born and this ratio is likely to continue or increase.  Now this is partly becasue we need to recruit some fluent Mandarin speakers who can work in China, but our lead statistician was born in South Africa and came over here to do his PhD and is keener, sharper, brigher and more entrepreneurial than the UK applicants.
I've been trying to create jobs by sponsoring a paid intern or two at our local Church, which does tremendous work in the community, but this is proving difficult as well.

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