Medium & Long-Term Strategies for UK Government to Reduce Unemployment

This report discusses strategies the UK government can implement to reduce unemployment in the medium and long term. It highlights boosting aggregate demand through Keynesian-style stimulus, minimizing geographical immobility by addressing barriers to relocation, implementing employment tax cuts to incentivize businesses to hire, and improving unemployment insurance programs to support those who lose their jobs. The report suggests that through a combination of fiscal policy, targeted subsidies, and enhanced social safety nets, the UK government can effectively address unemployment and promote economic stability. Desklib provides this and other solved assignments for students.

Economics for Business

Contents
Contents...........................................................................................................................................2
HOW CAN THE UK GOVERNMENT REDUCE UNEMPLOYMENT IN THE UK IN THE
MEDIUM AND LONG TERM.......................................................................................................1
REFERENCES................................................................................................................................2

HOW CAN THE UK GOVERNMENT REDUCE UNEMPLOYMENT IN
THE UK IN THE MEDIUM AND LONG TERM
In UK, unemployment level has risen in 2020 because of pandemic restrictions with around
1.5 million people unemployed in the year 2020 (Hantzsche, Kara and Young, 2019).
Figure 1: Unemployment Rate Rises to Highest in Almost Five Years. 2021
(Source: Unemployment Rate Rises to Highest in Almost Five Years. 2021)
The recent rise in level of unemployment is exclusive to that of unemployed for around 6
months or less with number rising to around one million. For reducing unemployment level in
medium and long term, UK government can do it in mentioned below ways:
Boosting aggregate demand: UK government can reduce unemployment level in medium
and long term through boosting aggregate demand through Keynesian style stimulus. It can
increase state investment spending as well as lower taxes so to boost disposable income. The
government can turn to fiscal policy as a mechanism to create new job opportunities through
involving construction projects which are labour intensive (Schmidt, 2019). Moreover, the
government can extra spend on housing, roads or some other infrastructure projects leading to
strong positive multiplier impact on incomes and jobs in future.
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Minimising geographical immobility: It comprises barriers faced by people while
moving from one geographical area to another with aim of finding job. It exists because of
migration controls, linguistic and socio-cultural barriers, huge regional variations, etc. Within
UK, there are various people possessing adequate skills for finding fresh occupation or work
including high house prices, regional differences, social ties and housing rents in living costs that
makes it complex to change location for getting new job. Herein, government of UK can
minimise geographical labour immobility and providing huge opportunities to citizens for
finding new working can lead to reducing unemployment level in medium and long term.
Employment tax cuts: It is analysed that government subsidies for organisations take
long term unemployed. For instance, in UK Youth Contract, payments up to £2,275 are available
for businesses that take on youth what have been claiming JSA for six or more months (Watson
and Buchanan, 2020). In this, government of UK can lower taxes on establishments which
provide job opportunities to huge workers. In medium and long term, by lowering down taxation
in businesses can be effective to contribute in improving employment rates in the economy.
Improvising unemployment insurance: Unemployment insurance program can be
implemented by government of UK so to deal with higher unemployment level in medium and
long term. The government can improve unemployment insurance through implementing a kind
of wage loss insurance and develop more automatic as well as longer extensions of
unemployment insurance benefits in times of recession (Hacioglu Hoke, Känzig and Surico,
2020). The nation can expand as well as promote usage of partial unemployment insurance
claims that could permit qualifying employees to claim deducted benefit while working as part
time. With these actions or steps, government can promote employment, encourage labor force
attachments, provide substantial advantages to eligible employees and stabilise economy in
medium and long term.
REFERENCES
Books and Journals:
Hacioglu Hoke, S., Känzig, D. R. and Surico, P., 2020. Consumption in the time of Covid-19:
Evidence from UK transaction data.
Hantzsche, A., Kara, A. and Young, G., 2019. The economic effects of the UK government's
proposed Brexit deal. The World Economy. 42(1). pp.5-20.
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Schmidt, M. G., 2019. The Politics of Labour Market Policy Structural and Political
Determinants of Rates of Unemployment in Industrial Nations. In Managing mixed
economies (pp. 4-53). de Gruyter.
Watson, I. and Buchanan, J., 2020. Beyond impoverished visions of the labour market.
In Creating Unequal Futures? (pp. 194-228). Routledge.
Atkinson. A. 2021. U.K. Unemployment Rate Rises to Highest in Almost Five Years. [Online].
Available through: <https://www.bloomberg.com/news/articles/2021-02-23/u-k-
unemployment-rate-rises-to-highest-in-almost-five-years>
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