worklessness in London

There's a big fuss about this at the moment. The main points from the Labour Force Survey (May 2005)...

Economic inactivity is much higher in London
Jobless students account for a lot of the inactive
Non-students who want to work - rate the same as UK average
Non-students who don't want to work - rate is lower than UK average

For me - the rate of worklessness for those who want to work (but are not officially ILO unemployed) is the same as the UK average - on aggregate, it perhaps wouldn't merit the huge fuss. But - there are concentrations of worklessness amongst certain geographical areas and ethnic groups.

My major issue is that - the incidence and cause of worklessnesss needs to be looked at in depth, and whether it is a problem, or specifically where it is a problem is at issue - oh, and then what you can do about it, if anything. I'd rather economics took more of a lead than politics in this case.

Of those not in employment of working age…
LONDON No. : 1,478,000
LONDON % of all working age: 31%
UK No. :9,316,000
UK % of all working age: 26%
London comparison to UK average: higher

Of those not in employment of working age… & are students
LONDON No. :394,000
LONDON % of all workless: 27%
UK No. : 1,957,000
UK % of all workless: 21%
London Comparison to UK average: higher

Of those not in employment of working age… & are not students, would like a job (are ILO unemployed; inactive and seeking or are not seeking but would like to work)
LONDON No. :490,000
LONDON % of all workless: 33%
UK No. : 2,983,000
UK % of all workless: 32%
London Comparison to UK average: same

Of those not in employment of working age… & are not students, don't want to work (not seeking, and don't want to work)
LONDON No. :593,000
LONDON % of all workless: 40%
UK No. : 4,377,000
UK % of all workless: 47%
London Comparison to UK average: lower

Immigration Bingo

So Clarke has finally brought up his plans for points 'n' quotas for immigration. I am largely unsurprised. Many nations - Australia, NZ, Canada, have implmented such a system for many years.

Will it work? the thing is, working in labour market economics in the past, it is impossible to set meaningful detailed quotas for skills. You rely on the market for demand and supply. Will the new system let the market work better? doesn't look like it.

And the new system will be subject to just as much fraud too. So potential applicants will find it difficult to buy the right papers to forge, say their date of birth and qualifications? or bribe an ex colleague in the old personnel dept to inflate earnings to meet the points quota?

I think that the simplest and fairest a system can be the better. Will the points quotas do this?

One thing I migh agree on is that there's the whole EU's labour supply out there up for grabs. However sometimes immigrants from the Indian subcontinent speak the English language better than others from EU countries.

One fear is that this will make it harder for companies to get the people they need.

Another thought is - yes, another big change to the immigration system - just how many can you make in 5 years, without causing severe disruption. I pity the IND staff who have just got their heads around the latest changes that were begun in 2003.

skills on their own are not the only answer

The Centre for Enterprise has launched a series of 'conversations' on topical issues related to economic development - they are asking for responses and comments a bit like a blog. They did a particularly good piece on skills I thought, and I have repeated my response below in a nice blue colour owing to vanity.

The Centre for Enterprise also have a new beta model for blogging and discussion, of which I have been invited to contribute in its development stage. Once its public I will post a link.

Firstly - I welcome this paper, which clearly illustrate the points that Skills are not the only answer, but are part of the answer, and a smaller part than popular opinion (and Govt Policy) would seem to merit.I have always thought several points are worth making about this agenda:

1) SKILLS UTILISATION is a key concept here - you could supply skills and qualifications to an employer and individual worker, but will they be fully deployed in the workplace? without associated investment in capital, or competitivness strategies, etc we could be investing in skills formation that is not utilised thereby creating a large deadweight expenditure. This captures a lot of your argument nicely - i.e. are we over investing in skills or investing in the wrong skills, or do we need some critical things to happen before its worth investing more in skills?

2) EXHORTING EMPLOYERS IS NOT THE ANSWER - the recent paper by Warwick University for Futureskills Scotland tells us this. And we know that businesses don't really pay much attention to government. We need to incentivise productivity improvements. This can include making it easier for a well performing business to take over an underperforming one, as well as the usual fiscal incentives.

3) THE ANSWERS MUST START WITH THE EMPLOYERS THEMSELVES - employers drive productivity gains - this should be the starting point - i.e. skills demand. In the past the starting point has always been skills supply - i.e. the institutions and the vested interests. This always creeps in - witness how quickly it creeped into the SSDA justifying itself as being the answer to the UK's productivity problem.

4) THE PUBLIC SECTOR CAN ASSIST IN PRODUCTIVY GAINS - our public sector could work better and achieve productivity gains too. Also - infrastructure etcetera.Lastly - I think the government can incentivise competitiveness and productivity gain, but is not very good at delivering it themselves through advice and services etc, unless it is basic infrastructure or research spend. The government should refocus on achieving a business environment and incentivised behaviour to enable productivity gain.

Comments from Ewart Keep are also pretty incisive: "I particularly enjoyed the way the author(s)show how those writing policy documents slide neatly from one small, often carefully qualified piece of evidence/research to a huge, unqualified and sometimes unwarranted conclusion and/or policy prescription. This is evidence based policy making where evidence based means you extract some isolated killer facts from the research and deploy them to support conclusions and policies that are already determined."

The overall message is that skills are not isolated from being a political football with selectivity in facts and messages from politicians and public agencies, and that we have been in a situation for quite a while of the "tail wagging the dog" in skills.

BAD PRACTICE: THE DATA DRIVEN ORGANISATION

BAD PRACTICE: THE DATA DRIVEN ORGANISATION

An economic development agency can’t understand why drop-out rates for its training programmes for unemployed young people are so high. So they commission a survey to find out, spending £100,000 on consultants to survey training programme participants and drop outs, conduct focus groups and research with a final report.BUT!A little bit of intelligence work on the local and national economy suggests that at the present time, more and more young people are staying in formal education, and the labour market offers fairly good job opportunities and prospects for young people, whether unemployed or just leaving school. Anecdotal feedback from training providers tells the agency that the entrants into the training programmes are people who cannot continue in education or cannot access jobs – they are the least qualified, and least employable young people. The training programmes were originally designed to cope with the average unemployed young person 20 years ago, and not aimed at those who have more acute problems in attaining qualifications and accessing work. Therefore the training programme does not meet the needs of the client group today, as it did 20 years ago. The issue is that the labour market has changed, while the training programme has stayed the same. Spending a few days finding this out is cheaper and provides more insight than commissioning a £100,000 research project.

THE MORAL OF THE STORY

The moral is that gathering intelligence on its own doesn’t provide you with answers. You must go one step further and ask what intelligence is telling you about your activities, the market and environment that you operate in. Initially, its best to analyse information already at hand to see if it answers your questions than to go and collect more and more data.

THE ANALYSTS EXPERIENCE – COMMON ISSUES AND PROBLEMS WITH SURVEYS

This analyst gets angry!I have lost count the number of times that I, or a colleague, have been administering and delivering a survey for a range of economic development organisations and they have asked for a bigger sample for their local area – AND – they have not been able to justify or give any rationale for the survey boost! Say the survey boost costs £100,000 and there is no reason for it – what’s the point? Then the local agencies tell us that its not accurate enough for local purposes - we ask ‘for what local purposes?’ – too often they couldn’t come up with any answer.

But – before we get too bolshy – people often have great difficulty expressing their needs and why they want things. A good analyst gets to the bottom of this need, if there is one. A good analyst asks the questions ‘what do you want the extra sample boost for?’ – as it tells them where the client or partner is coming from. And then the answer may not lie in a sample boost at all.