How will the 2009 Budget affect the job market?
We look at how the Budget will affect the labour market over the next twelve months.
Some of the biggest news to come out of Alistair Darling’s 2009 budget were the plans to spend £2.7bn on 250,000 new jobs over the coming year. Figures released this week showed that unemployment in Britain last month recorded its biggest rise in two decades and the Government has moved swiftly to try and turn the tide. Of the £2.7bn to be spent, £1.7bn will go to the Job Centre Plus network (this is on top of the £1.3bn promised to JC+ announced in the pre-budget report in November). This spending seems to indicate that the Government believe that the current unemployment crisis will get worse before it gets better.
Darling also outlined a new plan to get every person under 25 who has been unemployed for 12 months back into some form of work, training or work experience. Figures released this week showed that the number of ‘neets’ (Not in Employment, Education or Training) had nearly reached 1 million. Around 250,000 new jobs will be created at a cost of £260m, in areas where there are shortages such as Social Care to address this problem.
Will Darling’s budget revive the economy?
Despite the extra investment in the Job Centre network and in young people, the outlook from businesses seemed bleak. The Office of National Statistics reported that the jobless total jumped by 177,000 in the 3 months to February and the total number of unemployed has reached 2.1 million. Economists predict that this figure will be over 3 million by the end of the year. The Forum of Private Business (FPB) complained that the 2009 budget failed to address the main issues threatening the UK’s struggling small businesses. Proposals to improve access to finance, ease the burden of costs and stimulate economic activity were absent from Wednesday’s announcement. They also stated that although the Government has unveiled a new £1.7 billion job creation fund, nothing has been done to help smaller employers hold on to their key staff.
Although the plans outlined in this week’s budget will help the Job Centre Plus network which is struggling to cope with unprecedented demand it fails to provide the opportunity for large numbers of people to get back into work. Of those under 25 who are out of work, jobs will only be created for a quarter, leaving around 750,000 still looking for work. The lack of any proposals to ease business costs also leaves many more facing the prospect of redundancy as firms cut back. With many forecasters saying an early recovery is unlikely, the unemployment figures are likely to get a lot worse before they get better.
