A Comprehensive Analysis of Long-Term Unemployment in the UK Economy

This report delves into the multifaceted issue of long-term unemployment within the UK economy. It begins by dissecting the causes of long-term unemployment, including frictional, structural, classical, cyclical, and voluntary unemployment, providing a comprehensive overview of the factors contributing to this economic challenge. The report then explores the groups most affected by unemployment, examining the primary, secondary, and tertiary sectors. Furthermore, it evaluates the impact of different types of Active Labour Market Policies (ALMPs) on long-term unemployment, analyzing incentive reinforcements, employment assistance, occupational schemes, and human capital investment. The report also identifies the conditions under which ALMPs operate and concludes with recommendations for addressing long-term unemployment. Through detailed analysis and statistical data, the report offers a thorough understanding of the economic landscape and potential solutions.

Business Economics

Table of Contents
INTRODUCTION...........................................................................................................................1
Discuss the cause of long term unemployment......................................................................1
Explore the groups which are affected...................................................................................6
Effect of different type of ALMPs on long term unemployment...........................................8
Identify the condition under which ALMPs operated..........................................................10
Explain planning to provide evidence..................................................................................11
CONCLUSION..............................................................................................................................11
RECOMMENDATION.................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
Economics deals in production of different type of products and services in particular
economy. This will capture the areas of distribution, consumptions etc. The external factors
support in higher the business operation and major functions. The economics are directly
connected with market where many organisation are conducting their business activities. United
kingdom is developed country and their economic rate is better than other nations. In UK, Long
term unemployment rate is reduces by 1.10% in second quarter of 2017 from 1.20% in the first
quarter of 2017 (Newbold, Carlson and Thorne, 2012). The average rate of unemployment in UK
is 2.09% from 1992 to 2017, achieving the high time of 4.30%. The impact of ALMPs on labour
market results has been assessed through macro and micro research. This study describe the
comparison between control groups and programmes participations to study the experiments.
This report is based on UK economic condition and situation of business rate.
Discuss the cause of long term unemployment
In UK, the unemployment rate is increasing from 5% to 8% with support in increasing
the number of long term unemployed. At current time period, almost 2.5 million people are
unemployed and more than one third are work for at-least 12 months. The increasing frequency
of long term unemployment is the typical characteristics of all niche period. Long term
unemployment is perennial policy which concern about different reasons. Long term
unemployment will directly affects the physical and mental health care of an individual and it is
one of the essential cause of poorness for their household (Summers, 2014). On the other hand,
long term unemployment rate is identified the labour market. In UK, this will play an essential
role in facing the competition of jobs, making less effective in curbing salary load and leading in
rising in unemployment rate. There are different type of causes of unemployment which affect
the economics of United kingdom that are discussed as follows:
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 Frictional unemployment- This is that unemployment cause which caused by time of
people which takes between job time period. For example, graduates or changing the jobs
by people. At some time, there are few frictional unemployment in the UK economy so
that their information is not perfect and this will take lot of time to identify actual work.
 Structural unemployment- This is that cause which affect the individual skills and
mismatch of abilities in the labour market which can be caused by these things:
◦ Occupational change- It is that unemployed cause which is complex in learning new
things and skills that are capable for the new industry and help in changing
technology (Vasant, 2012). For example, a farmer who is unemployed may struggle
for searching the job for doing work in top sectors.
◦ Geographical quality- It is another cause of unemployment that difficulty which
support in moving with regions for getting correct jobs. For example, there are
various jobs in UK, but this will complex to identify best suitable accommodation and
find out schools for their children's.
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Illustration 1: Types/Cause of unemployment, 2017
(Source: Types/Cause of unemployment, 2017)

◦ Technological changes- It is necessary to make development in the labour saving
technology at some industries but at some time there will be reduces in the labours
demand rate. This will cause due to modifications in technologies of united kingdom.
◦ Structural alteration in the economy- Th reduction of coal mines due to lack of
competitiveness which means to the various coal miners were unemployed (Fair,
2010). While at sometime, they establish that jobs in new industries such as
computers.
 Classical unemployment- There are some points which identify the cause of
unemployment rate that are as under:
◦ This will arises when salary in competitive labour market are push the above
equilibrium. For example, the labour supply is high than the labour demand.
◦ When equilibrium level is minimise the salary or trade unions. It is known as
“disequilibrium” unemployment.
 Voluntary unemployment- This will occurs when people select remaining unemployed
rather than take accessible business. For example, if advantages are general, than people
like to prefer to choose benefits rather than getting work (Yellen, 2011). Frictional
unemployment is play an important role in voluntary unemployment because this is the
another type for finding the best jobs.
 Cyclical unemployment- There are various factors which directly affect the
unemployment cause that are as under:
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◦ Demand deficient unemployment arises when the economy is lower the whole
capacity. For example, in the recession time period aggregate demand will fall and
leads to output and it is negatively affect on economic growth rate.
◦ When the fall in output, an organisation will give employment to workers for
producing some products and services. The firm will help in leading the business to
large scale repetitiveness.
◦ At the time of recession, unemployment support in increasing firm turned off
employees.
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Illustration 2: Classical unemployment, 2015
(Source: Classical unemployment, 2015)

As per the above graph image, it can be analysed that in UK there are 523000 young
people whose age is 16-24 were unemployed in august-October 2017, and it will continuously
decreasing in the last year. The rate of unemployment for 16-24 year old people was 12%, this is
fall with 13%. there are 337000 people whose age is 16-24 were unemployed. The full time
education was 10.2% which compared with 11.7% in the year.
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Illustration 3: Unemployment Level By Age, 2017
(Source: Unemployment Level By Age, 2017)

According to the above graph picture, it can be concluded that unemployed rate is always
fluctuating with change in growth rate of country. This can also analysed that people whose age
is 16 or above they are work as per the season. It will show the unemployed rate from 1971 to
2017 in the UK.
Explore the groups which are affected
The United kingdom has shows the good economic with effective rule of laws and open
the trading environment and also develop financial sector (Varian, 2014). A market labour is
relatively liberal by European standards which has to be complemented that are one of the most
efficient business and investment in environment. There are three type of economy sector that
are discussed as follows: Primary sector- Primary activities are directly depend on environment which help in
utilising the resources of earth that includes water, land, vegetables, agriculture,
minerals, building materials. This will also includes assembly and hunting, fishing,
agriculture, excavation, forestry, pastoral activities. In primary sector, there are various
activities which support in engaging with honest and loyal employees due to the outside
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Illustration 4: Unemployment rate, 2017
(Source: Unemployment rate, 2017)

nature of their work or task. In now days, primary sector provides employment for the
people for 150 years ago. There are various reasons which help in change in primary
sector activities (Chow and Dunkelberg, 2011). Firstly, an individual has to own the
resources which are used for digging something that is not exist in location. Sometime,
coal is too expensive and no company will purchase the coal mines. Second reason is
that primary sector can not import raw materials because these assist in maintaining
required materials for the company. In many countries, coal mines are used in mined
iron ore and coal for making steel. Third reason is social change which is big impact on
country economy. There are many primary sector jobs includes hard working, dirty and
tiring. Young people does not want to perform such type of work at shops and offices
where they gives payment for better time period. Last reason is government policy where
authorities will motivate the people for doing work in primary sector. The industry will
keep the business in falling down. Secondary sector- The secondary activities will add the values to natural resources by
modify raw materials into finished goods and services. This sector are concerned with
processing, manufacturing and construction within the industries. People are always
engaged with secondary activities which is known as blue collar worker. The secondary
sector includes industries which help in producing finished goods which are involved in
construction. In primary sector and manufacturing finished products are used for
maintaining business (Naudé, 2010). It is beneficial for the country because they can
assist in selling and exporting of domestic consumers. They produce waste material and
waste heat which may cause different type of environmental problems or affect the
pollution. The UK economy is primary based on agricultural. The new technology
development help for rapid industrialisation and growth of secondary sector. The
economic development motivate people for leaving the land and doing work for new
industries in the UK. The production sector became the largest employer and this is the
biggest element of the UK economy.
 Territory activities- The territory sector includes both exchange and production of goods
and services. On the other hand, production includes in the provision of services which
are consumed. Transport, communication, exchange trading facilities are used to
overcome with distance. In developing country like UK, the service sector is the largest
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factor of the economy which is increasing by 80% of GDP and gain same ratio of
employment (Ekman and et. at., 2011). In united kingdom, service sector rising with
70% of the workforce. The people work in the UK are approximately 80% in the
territory sector. The amount of people gain variety of jobs within the sector that are
different from each. For example, a cleaner who work on the minimum wage and then
there are city bankers who can earn around $25000 or in more years. Territory sector
jobs includes Retail hotels, education and health, catering, finance for increasing
economic growth.
Effect of different type of ALMPs on long term unemployment
The ALMPs has been adopted by developing and growing number of nations in all over
the European countries. The diffusion of ALMPs can described by their two dimensional feature
that includes rapid investment in skills, knowledge and training at the same time they also focus
on strength and weakness of work. There are such demanding side which help in maintaining
ALMPs that make them in likeable, principle to policymaker in both conservative and broad
welfare program. The liberal regimes, whereas policymaker are based on conservative welfare
which find out the attractive and offer social security without forming necessity to deal the
measures and without changing establishment of social hierarchy.
There are various international organisation which have been eagerly promote ALMPs
that includes Organisation for Economic Co-operation and Development (OECD) and European
union (Mason, 2011). Active labour market policies presents the different feature of social
democratic welfare regime. Therefore, despite two dimensional features of ALMPs are totally
depend on the regime of welfare and Nordic province became more popular towards them.
Active labour market policies offer two concept that includes pro-market business orientation
and investment in human assets. So that pro-market employment orientation refers to measure
the policy which place a person in non subsidized jobs within the private and public sector. On
the other hand, investment concern with human capital for extending the policies and plans to the
low level investment for orientation of workforce. This will gain the requirements of all the
social and external benefits and in the high level investment orientation should incorporated in
the labour market place. There are four types of ALMPs that are as follows:
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 Incentive reinforcements- This refers to effect on the strengthening of positive and
negative work incentives to the people for providing benefits (Anderson and et. al.,
2014). Employment assistance- It includes job coaching, placement services and job subsidies. Occupation- This is the third form which consist for measuring such type of job creation
policies and schemes to keeping the people who are jobless and active and also to forbid
the reduction of human capital.
 Human capital investment- It is the fourth type of ALMPs which provides basic
education and occupational preparation to unemployed people. The labour market
training is the first form for measuring motives at extending or adopting market labour
that are correct in setting skills and knowledge.
In human capital investment represents the job finding and monitoring the incentives
reinforcement and employment assistance. In current economic condition, ALMPs can assist
those people who are unemployed for finding another job without disconnected from labour
market (Types of ALMPs. 2017). They can assist in protecting people for becoming long term
employment. Active labour market policies will play an important role in current crisis on the
other hand, such policies can slower the economic growth, change in demographics and
enhancing the skills which are needed. ALMPs is the key policy in securing transition that are
caused by technologies, environmental and social changes in proper manner. In UK, the
companies will offer new opportunities for increasing skills and contribute to the more
productive, inclusive and competitive economy. When the change in promotion and increasing
employment rate, these factors are required for reaching the EU employment target that are
already settled (Naudé, 2013). In current time period, the job seekers can search whole sites
which are needed for future economic by resurgence arises in badly manner. Various types of
ALMPs are help in analysing different policies which has to be organised in the nation.
In UK, active labour market policies has been understand by each person. The
intervention will occurs at the time of framing the central and economical state of the nation.
United kingdom spending 90% cost on ALMPs to provide labour market services. Another major
role is that nation has shortage of skills. This is also identified as in some industries the entire
country has essential role on over-supply of skills. As per the majority, unemployed people does
not take services of ALMP. In current time period, united kingdom is highly unregulated labour
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market which makes work more easy to find different things (Wennekers and et. al., 2010). The
importance of ALMP in the country for getting the required outcome not for supply employment
to people but also maintain all market situations. Active labour market policies is outstanding in
the economy policy.
Identify the condition under which ALMPs operated
Active labour market policies are authorities programmes which intervene in the labour
market to assist the unemployment for analysing work. There are many programmes which help
in growing the public work projects and this will implemented under the New deal, that can
designed to combat widespread unemployment in the developing world (Christauskas and
Miseviciene, 2012). The condition where people are unemployment so that it is the responsibility
of UK government is to give them some amount for surviving on the earth. Some country
authorities also provides jobs to their nation people which help them in living the life. This is the
major situation where ALMP operate people and manage their lives. There are various policies
and plans which support in maintaining the people livelihood and government control such
activities. The condition in which ALMPs must be operated are unemployment that refers to
measures the prevalence of unemployment and it is measured by dividing the total number of
unemployed person by single individual who current in condition of labour force. At the time
recessions, an economy generally experience high rate of unemployment rate (Mason and
Brown, 2013). There are four causes of frictional unemployment which is another type of
unemployment when employees leave their jobs for finding better opportunities. When people
are unemployed in groups of members than it hurts the remaining economy and creating major
problem or issues. As per the legal rule, unemployment is occurs when large number of people
are facing the condition of unemployment of people.
According to the UK country law, the unemployment insurance program provides
unemployment benefits to eligible employees who are unemployed through no fault of their own
services and meet with the other required state and nation laws. In UK, it is measured that
unemployment rate is increasing 4.5% and approximately 1.49 million people. This is reduction
in unemployed person which is more than 1,52,000 at the early time period. The major objective
of active labour market programmes is to combine with unemployed young people into labour
market, stabilise the career entry and promote the vocational training for the labour market entry.
ALMPs manage and control their training and development programmes for to serve the align
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