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PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHLO #0648/01 0721343
ZNR UUUUU ZZH
P 131343Z MAR 09
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC PRIORITY 1707
RUEHC/DEPT OF LABOR WASHDC PRIORITY
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHBL/AMCONSUL BELFAST PRIORITY 1270
RUEHED/AMCONSUL EDINBURGH PRIORITY 1101

UNCLAS SECTION 01 OF 02 LONDON 000648 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ELAB ETRD EINV UK
SUBJECT: UK LABOR MARKET BACKGROUND FOR G8 LABOR MINISTERIAL 
 
REF STATE 15533 
 
LONDON 00000648  001.2 OF 002 
 
 
¶1.  (SBU) Summary:  HMG does not have a specific objective for the 
upcoming G8 labor ministers meeting in Rome, but hopes that 
ministers will share information on best practices and experiences 
related to the economic crisis.  This meeting comes during a 
particularly turbulent time for the UK's labor market.  It has been 
hit hard by the financial crisis with unemployment increasing by 1.1 
percent over 2008, and now standing at 6.3 percent, and expected to 
rise further before the end of the recession.  Job vacancies are 
falling while layoffs are rising.  Public reaction to rising 
unemployment has so far been relatively muted, but is expected to 
intensify as the recession deepens.  HMG has introduced a multitude 
of initiatives to mitigate the impact of the recession on the UK's 
labor market.  Its initiatives were designed to stimulate labor 
demand, help the unemployed back into work, and change the UK's 
benefit system.  End summary. 
 
HMG Expects Discussion of Best Practice 
--------------------------------------- 
 
¶2.  (SBU) The UK does not have a specific objective for the upcoming 
G8 labor ministers meeting, according to an official from the 
Department for Work and Pensions.  Satish Parmer, of the 
Department's Joint International Unit, told us the UK is looking to 
ensure that the meeting provides a good opportunity for ministers to 
share information on best practices and experiences related to the 
economic crisis.  HMG expects discussion of what action needs to be 
taken to help affected workers and families.  It also hopes that the 
messages coming out of the meeting will help inform the discussions 
at the London Summit. 
 
UK Labor Market: Statistics and Overview 
---------------------------------------- 
 
¶3.  (U) The UK's labor market has been hit hard by the financial 
crisis, particularly given the size of its financial sector which 
contributes approximately 11 percent to UK GDP.  The employment rate 
for people of working age was 74.1 percent for the final quarter of 
2008, down 0.3 percent from the previous quarter and 0.7 percent 
over the year.  Unemployment increased by 369,000 in 2008 to reach 
1.97 million, with the unemployment rate increasing from 5.2 percent 
to 6.3 percent.  Redundancies in the last quarter of 2008 reached 
259,000, the highest figure since comparable records began in 1995. 
Unemployment is expected to reach 3.2 million before the end of the 
recession with few sectors remaining unscathed.  The claimant count, 
which measures the number of people claiming unemployment benefits 
but who are actively seeking work, was 1.29 million in January, the 
highest figure since 1999.  It was up 73,800 over the previous month 
and up 438,100 over the year.  There were 504,000 job vacancies in 
the three months to January, down 76,000 over the previous quarter 
and down 179,000 over the year.  This is the lowest figure since 
comparable records began in 2001. 
 
¶4.  (U) So far, public reaction to rising unemployment has been 
fairly muted.  However, the use of foreign workers in areas of high 
unemployment sparked a string of wildcat strikes at energy plants 
across the country earlier this year.  HMG worked with the unions, 
employers and ACAS (the UK's conciliation and arbitration service), 
to resolve the strikes.  A large protest, "Put People First - March 
for Jobs, Justice and Climate," is planned immediately prior to the 
G20 London Summit.  The Trades Union Congress (TUC), along with the 
UK's largest unions, will join a variety of aid organizations and 
climate campaigners to draw attention to, amongst other things, the 
plight of the unemployed in the UK. 
 
HMG Initiatives to Increase Labor Demand 
---------------------------------------- 
 
¶5.  (U) HMG announced a GBP 20 billion fiscal stimulus package in 
its November 2008 Pre-budget report.  This was designed, in part, to 
increase employment levels, particularly in the construction sector. 
 It included GBP 3 billion of public infrastructure projects brought 
forward to support jobs during the slump.  This included capital 
projects on housing repairs and insulation, school extensions, 
refurbishment of doctors' practices and transport improvements to 
provide jobs while the UK economy faced a recession.  HMG's fiscal 
stimulus package also included a 2.5 percent reduction in 
value-added tax (VAT) for one year, putting GBP 12.4 billion into 
the economy.  This was aimed at stimulating the economy and 
providing jobs during the downturn. 
 
¶6.  (U) HMG has stressed the importance of working with industry to 
ensure vacancies are filled efficiently.  Prime Minister Gordon 
Brown and Secretary of State for Work and Pensions James Purnell met 
with 22 key employers and representative bodies in February for a 
meeting of the National Employment Partnership (NEP).  Together, the 
22 NEP members employ more than two million people and are expected 
to fill thousands of vacancies over the next twelve months.  At the 
 
LONDON 00000648  002.2 OF 002 
 
 
meeting, NEP members committed to: advertise all non-specialist 
vacancies through Jobcentre Plus (a government funded employment 
agency and social security office); promote the development of 
skills through the use of apprenticeships; continue to offer advice 
to help people facing layoffs; and fill more jobs through Local 
Employment Partnerships. 
 
HMG Initiatives to Help the Unemployed Back into Work 
----------------------- ----------------------------- 
 
¶7.  (U) HMG has focused on retraining and skills to counter rising 
unemployment.  In December 2008, it announced a package of measures 
designed to get people the training and skills to help them succeed 
in the difficult job market.  This included GBP 79 million of 
additional European Social Fund money to support people who become 
unemployed, specifically targeting people who need to develop their 
confidence and life skills.  HMG already invests GBP 4.5 billion on 
adult training, but announced this would become more targeted, 
particularly helping to deliver short-term pre-employment training 
and increased provision through Jobcentre Plus and the national 
Careers Advice Service.  It announced an extra GBP 1.3 billion to 
guarantee that everyone looking for work will get advice on finding 
a new job, help to write a new resume and complete job applications, 
help on retraining and skills advice, and help with rent and 
mortgages. An additional GBP 1.3 billion of funding was made 
available to Jobcentre Plus to increase the support offered. 
Jobcentre Plus will use the funding to deploy extra resources, 
including allocating nearly 2,000 extra staff to deal with the 
increase in claims for Jobseeker's Allowance. 
 
¶8.  (U) HMG allocated GBP 500 million for the long-term unemployed, 
specifically those unemployed for longer than six months.  This 
package included: incentives, or "Employers' Golden Hellos," of up 
to GBP 2,500 for employers to recruit and train the long-term 
unemployed; extra funding for training places to help the unemployed 
gain new skills; help to set up businesses; and work-focused 
volunteering options. 
 
Changes to Unemployment Benefits 
-------------------------------- 
 
¶9.  (U) Jobseeker's Allowance is being reformed with the 
introduction of a personalized, contracted Flexible New Deal to 
provide support for skills and back-to-work activity.  It will 
provide a unified approach for all jobseekers.  The level of support 
jobseekers receive and the requirements placed upon them to find 
work will increase the longer they are on benefits.  Additionally, a 
Welfare Reform Bill is currently going through Parliament.  Key 
provisions include: lone parents and partners of people with younger 
children and disabled people, who could work with support, will be 
expected to take part in training activities and the long-term 
unemployed will be expected to "work for their benefits." 
 
Websites 
-------- 
 
¶10.  (U) As requested, below are a number of useful websites which 
provide information on the UK's response to a deteriorating labor 
market. 
 
-- www.dwp.gov.uk - UK Labor Ministry 
-- www.statistics.gov.uk - UK Statistics Authority 
-- www.number10.gov.uk - Prime Minister Brown's website 
 
LEBARON