CAIN: Democratic Dialogue: Social Exclusion, Social Inclusion (Report No. 2)

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Social Exclusion, Social Inclusion


Unemployment: a long-term problem

Maura Sheehan
Mike Tomlinson

Commentators of all shades are agreed that economic regeneration and employment growth in Northern Ireland represent a daunting task, even in the Light of the 1994 ceasefires.

The economy continues to be beleaguered by deep-seated structural problems, of which high unemployment - especially long-term unemployment - is the most cogent indicator. The significance the government appears to give to long-term unemployment, especially in terms of political and social stability, was highlighted at the International Investment Forum in Belfast in December 1994, when the prime minister announced that the Department of Economic Development (DED) would oversee a new Community Work Programme (CWP).

Northern Ireland's unemployment rate is persistently above the average for the 15 European Union member states, surpassed only by Spain, Finland and the Republic of Ireland. Within the United Kingdom, no region has higher unemployment: it stood at 11.7 per cent in May 1995, compared with the UK average of 8.3 per cent.[1]

In January 1995, 56.5 per cent of the unemployed in Northern Ireland had been out of work and claiming benefits for more than a year - only the Greater London region comes close to this (at 42 per cent) and on average across the UK 38 per cent of the unemployed are long-term.[2] Moreover, 18 per cent of the unemployed in Northern Ireland have been unemployed for over five years, compared with 4.4 per cent for the UK as a whole.[3]

Nor is this heavy burden evenly distributed. Catholic males remain more than twice as likely to be unemployed as their Protestant counterparts.[4] Indeed, 60 per cent of the long-term unemployed are Catholic men.[5] A recent survey of Catholic and Protestant women's labour market opportunities found that "the disadvantages faced by Catholic women are deeper than those faced by Protestant women, in so far as smaller proportions of Catholic women are in the labour market and, when they are there, they are more likely to be unemployed".[6]

Reflecting trends found in most other industrialised countries, in Northern Ireland higher educational qualifications are associated with lower probabilities of being long-term unemployed, about 65 per cent of whom have no formal qualifications. The fact that Northern Ireland is the UK region with the highest proportion of individuals who leave school without any formal qualifications has important implications for long-term unemployment.

Geographically, unemployment varies from 8.1 per cent in the Ballymena travel-to-work area to 18.2 per cent in Strabane. And closer scrutiny, by ward, reveals variation from 4.1 per cent in Hillsborough, north Down, to almost 50 per cent in the west Belfast wards of Falls and Whiterock.

Worse still, a narrow focus on official unemployment data excludes the large number of people who have given up the search for employment. Yet the rise in 'economic inactivity' in Northern Ireland over the past two decades has been even greater than the rise in unemployment. While male unemployment increased in 197 1-91 by 6.1 percentage points (from 9.8 to 16.1 per cent), economic inactivity increased by 11.2 points over the same period (from 5.4 to 16.6 per cent). Adding the unemployed and economically inactive reveals that in 1991 almost one-third (32.8 per cent) of males in Northern Ireland were non-employed - more than twice the rate of 15.1 per cent in 1971.

Clearly, lack of employment is one of the most serious economic and social problems facing Northern Ireland, and the inequalities generated by the shortfall have important political implications.

At the start of the 80s, and again in the late 80s and early 90s, unemployment in the UK rose to levels unprecedented since the 30s. At the same time, there was a distinct shift in economic and labour market policies, with priority given to tackling inflation, trade union power, labour market rigidity and the size and role of the public sector. Unemployment became a marginalised policy issue in Britain, if less so in Northern Ireland.

This was not because there was little unemployment, but because unemployment had been "redefined as a residual and individualised problem, for which the enterprising free-market Thatcher administration had no direct responsibility. There was, then, no crisis".[7] The shift in the burden of responsibility, from government to individuals, resulted in high unemployment becoming politically tolerable, notwithstanding widespread concern about social disturbances and growing evidence of the link between unemployment, ill-health and crime.

Consistent with this approach towards the economy as a whole, the 'supply side' of the labour market has been the focus of government policies. Programmes have focused on the skills of unemployed individuals and how to motivate them. In the early 80s, there was a vigorous agenda blaming unemployment on high benefits, lack of labour discipline and growth of the black economy.[8] It was, and still is, frequently asserted that long-term unemployment especially was largely due to the characteristics, attitudes and behaviour of the unemployed.

In particular, it was argued that the unemployed lack skills ('human capital shortfall'); live in the wrong place and are unwilling to travel ('low mobility', combined with the 'chill factor' in Northern Ireland); have priced themselves out of jobs and refuse to work unsocial hours ('inflexibility'); or do not try hard enough to find work ('low search intensity'). The crux of the problem was not the demand for labour but the quality of its supply.

By the end of the decade, benefit entitlements, particularly for the young unemployed, had been reduced in value and accessibility. And the unemployed were being scrutinised more heavily in terms of fraud, willingness to work and job searches.[9]

Alongside this withdrawal of the 'right to be unemployed', a range of measures was developed which some cynically dismissed as an attempt to disguise unemployment.[10] By the 90s, this second component of government policy could be more readily identified with training and retraining programmes.

With the growing influence of EU social policies, training and employment policies are now subject to considerable debate over targets, outcomes, delivery and impact on equal opportunities. It has been argued in that context that policies and provision have lagged behind need.[11] In particular, the proportion of unskilled and low-skilled workers receiving training is the lowest of all groups.[12]

In Northern Ireland, there are approximately 29,150 individuals on employment and training programmes. The main schemes are: the Youth Training Programme (YTP), 38.8 per cent; Action for Community Employment (ACE), 31.6 per cent; Job Training Programme (JTP), 12.9 per cent; Jobskills, 8.9 per cent; adults in Enterprise Ulster, 5.3 per cent.[13] Little is known about their impact on employability. In 1993-94, 36 per cent of ACE participants moved into employment, full-time training or education within three months of leaving.[14] How many moved into 'real' employment and the nature of that (eg full-or part-time) remains obscure. And, looked at the other way around, two-thirds of ACE participants return to unemployment.

It is not surprising that the success of the government's two main labour-market policies has been limited and unemployment remains high: these policies have been largely separated from the broader economic and social environment - in particular, from the demand side of the economy. 'Motivational' and training policies need to be accompanied by a sustained attempt to address the fundamental weaknesses in the British economy, such as low investment and the archaic framework in which the financial institutions operate.[15] In other words, policies to widen access to training and education also require policies to ensure demand for the skills created.

Policies to stimulate aggregate demand (including exchange-rate policies) can essentially only be implemented at the level of the UK economy, or indeed higher.[16] This might suggest the scope for policy innovation in Northern Ireland was negligible.

But political stability, arising from the 'peace process', would increase opportunities and incentives for greater economic cooperation between north and south. Part of the developing agenda includes harmonisation of industrial development policies, education and training provision, and other labour-market approaches. Increased cooperation can stimulate policy development which departs from a UK-wide and UK-driven framework.

In addition, while estimates vary, it is generally recognised that increased co-operation has the potential to create several thousand new jobs.[17] In the absence of broader political development, however, the constraints imposed by Northern Ireland's regional status will remain.

The Community Work Programme, unique to Northern Ireland, will initially provide places for 1,000 long-term unemployed in three blackspots: Strabane, Fermanagh and the largest, west Belfast. The CWP is a significant new policy, which if successful may be extended to 20,000 places. None of the existing employment and training measures provides placements of three years duration, nor a range of benefit premia (up to a theoretical maximum of £55) differentiated by skill level.

Placement on the CWP is available to claimants who have been unemployed for more than a year; those aged 18-24 must also have a high-level academic or a recognised vocational qualification, or have completed a number of training schemes.

While the programme appears innovative, it has some obvious deficiencies. It will benefit primarily males classified as 'unemployed', excluding the large number of economically inactive and unregistered unemployed women. And the payment structure favours the most mobile and employable, such as the single or childless couples or those with managerial skills. Thus it is questionable whether it will adequately target those who have the highest probability of being long-term non-employed.

Moreover, long-term unemployment is the result of two flows-those becoming long-term unemployed and those leaving the unemployment count. The CWP will only increase the numbers coming off the count, since an individual must already be long-term unemployed to qualify. In other words, it will 'reshuffle' the unemployed, as those who go on the scheme and come off will then be classified as 'short-term' unemployed.

To reduce the numbers coming on to the count would mean increasing the overall number of jobs in the economy But significant stimulation of employment growth would require macro-economic intervention, especially on the demand side, the scope of which, as indicated above, is highly limited at the regional level.

Thus, although the CWP will have a significant impact, in the short-run, on the number of individuals defined as long-term unemployed, it is simply not big enough to tackle the overall unemployment problem. Since Catholic males are more likely to be long-term unemployed than their Protestant counterparts, it will reduce the politically sensitive unemployment differential. In the absence of other policies, however, this is likely to be short-run.

Despite the constraints at regional level, there are policies which could be implemented to reduce long-term unemployment and generate a more equitable distribution of resources. These include:

  • increasing economic and social co-operation with the republic, given its job creation potential-but a coherent island-based strategy to reduce long-term unemployment would have to be built in, to ensure the long-term unemployed benefited;

  • equality-proofing industrial development and training policies, to ensure employment is more fairly shared by gender, religion and disability;

  • setting reducing targets for the number leaving school with no formal qualifications;

  • attaching a formal qualification to the WP;

  • encouraging firms, especially new inward investment projects, to hire a certain percentage of the workforce from the long-term unemployed, by rendering employment and training grants so conditional - local labour clauses in government contracts could be used to the same effect; and

  • while the Industrial Development Board's recent target that three-quarters of new inward investment projects should be located in, or adjacent to, areas of greatest need can potentially reduce long-term unemployment in disadvantaged areas,[18] a more precise target would be assisted employment in disadvantaged areas.

A final problem is that there is little understanding of the attitudes, behaviour and needs of the long-term unemployed or how they view special training and employment measures, such as the CWP. Moreover, there is little understanding of employers' attitudes towards hiring the long-term unemployed, following their participation in employment and training schemes.

It is therefore timely that, as part of its review of fair employment legislation, the Standing Advisory Commission on Human Rights has commissioned several research projects that will begin to examine these issues (including one by the authors into long-term unemployment and the role of the CWP in west Belfast). It is hoped the findings from these studies will provide policy-makers, community groups and employers with information and insights to enable more effective strategies and programmes to reduce long-term unemployment to be implemented in Northern Ireland.


Footnotes
1 Official government statistics on unemployment are based on the 'claimant count', which includes only individuals who are available and actively looking for work. All unemployment rates quoted are based on seasonally adjusted figures.
2 P Convery, Working Brief, no 62, Unemployment Unit, London, 1995
3Northern Ireland Economic Council, Autumn Economic Review, Belfast 1994
4 D Smith and G Chambers, Inequality in Northern Ireland, Clarendon Press, Oxford, 1991; A Murphy and D Armstrong, A Picture of the Catholic and Protestant Unemployed, Central Community Relations Unit, Belfast, 1994
5 D Armstrong, Long-term Unemployment in Northern Ireland: Characteristics and Causes Northern Ireland Economic Research Centre, Belfast, 1994
6C Davies and N Heaton, A Matter of Small Importance?: Catholic and Protestant Women in the Northern Ireland Labour Market, Equal Opportunities Commission, Belfast, 1995
7 E McLaughlin, 'Towards Active Labour Market Policies: an overview', in E McLaughlin ed, Understanding Unemployment, Routledge, London, 1992
8P Minford, Unemployment: Cause and Cure, Blackwell, Oxord, 1985
9Such measures will be further developed in the near future with the (delayed) implementation of the Job Seeker's Allowance from 7 October 1996. Furthermore, the introduction of Incapacity Benefit (which is more restrictive than Invalidity Benefit) is predicted to increase the claimant count by as much as one quarter over the next few years, adding to the volume of sickness and disability amongst unemployed claimants.
10P Donaldson, A Question of Economics, Penguin, 1985
11 M White, Training Programmes and Employment Services for Adult Unemployed People in Britain, NIERc, Belfast, 1992; R Jackman, 'An Economy of Unemployment?, in E McLaughlin ed, op cit
12E McLaughlin, op cit
13 NIEC NIEC, op cit
14Training and Employment Agency, Annual Review 1993-94, Belfast, 1994
15 Commission on Social Justice, Social Justice: Strategies for National Renewal, Vintage, London, 1994; W Hutton, The State We're In, Jonathan Cape, London, 1995
16J Smith, 'Policies to Reduce European Unemployment', in J Michie and J Smith eds, Unemployment in Europe, Academic Press, London, 1994
17 NIEC, The Economic Implications of Peace and Political Stability for Northern Ireland, Belfast, 1995

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